India to block access to global cryptocurrency exchanges including Binance

India's Financial Intelligence Unit (FIU) wants to block the URLs of nine cryptocurrency exchanges for "operating illegally" and not complying with the Prevention of Money Laundering Act.

The UIF has urged the Ministry of Electronics and Information Technology to block the URLs of binanceBitfinex, Bitstamp, Bittrex, Gate.io, Huobi, Kraken, KuCoin and MEXC Global.

Lack of compliance with AML/CFT guidelines

In its statementThe FIU said virtual digital asset service providers (VDA SP) operating in India must be registered with the regulator and comply with established obligations to prevent money laundering.

"To date, 31 VDA SP have been registered with FIU IND," ​​the FIU said.

However, several offshore entities, although serving a substantial portion of Indian users, were not registered and were not included in the anti-money laundering (AML) and counter-financing of terrorism (CFT) framework.

The FIU did not issue a specific deadline within which these crypto exchanges must comply. He also did not mention any consequences for these companies other than blocking their URLs.

In March 2023, the Indian Ministry of Finance required All cryptocurrency companies register with the FIU to comply with anti-money laundering requirements. This policy required the crypto exchange to verify user details through Know Your Customer (KYC) processes.

Crypto Regulations Changing in India Amid Growing Adoption

Cryptocurrency adoption in India has been on the rise, as seen in the Chainalysis Global Cryptocurrency Adoption Index 2022. India is the second largest crypto market in the world in terms of trading volumes. This growth has attracted regulatory scrutiny.

India is currently developing a crypto regulatory framework based on the recommendations of the International Monetary Fund and the Financial Stability Board. This framework will be launched in 2024 and could include comprehensive tax and KYC policies.

In August 2023, Indian Prime Minister Narendra Modi advocated for a global crypto regulatory framework. He said these regulatory frameworks for emerging technologies should not belong to a single country but to a group of countries.

While cryptocurrency usage in India remains high, the country's regulators have taken a tough stance towards the industry. India imposed a massive 30% capital gains tax on profits made from cryptocurrency transactions. This tax rate is higher than stock investments.

The governor of the Reserve Bank of India has also attacked the crypto industry publicly, saying that investing in cryptocurrencies is akin to speculative gambling.

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