Crypto giants Binance and KuCoin, which left India after a regulatory blockade, are set for a comeback after the global exchanges applied for registration and compliance in the country. In December, India’s Financial Intelligence Unit (FIU) called to block web addresses of a number of global crypto firms that were not registered in the country over concerns that some of them may be misused for money laundering.
On Friday, FIU said that it has lifted KuCoin’s suspension after the exchange paid a fine of around $42,000, and is processing Binance’s application.
“We are yet to decide on the quantum of fine to be levied on Binance, and the process is likely to take some time,” said Vivek Aggarwal, director of FIU. “They have gotten registered with us as part of a two-step process. The second step is to complete compliance proceedings after an order from FIU. Kucoin’s proceeding has been concluded, and they are now as compliant as an Indian virtual assets service provider (VASP),” Aggarwal said after meeting 46 VASPs on Friday.
To operate in India, crypto exchanges must register with regulators and comply with the Prevention of Money Laundering Act (PMLA), 2002 legislation, and FIU directives. While many exchanges deregistered Indian users and stopped local operations after the FIU action in December, Binance, KuCoin, and a handful of others chose to apply for compliance, Aggarwal said. Among others, the exchanges are required to appoint a principal compliance officer with a local address and contact details. Aggarwal, however, clarified that the officer has “no requirement to be in India.”
Indian crypto exchanges, however, do not expect any immediate impact from the global ones resuming India operations. “KuCoin has just begun collecting tax on crypto trades in India, but the taxation compliance is yet to be certified. This is a significant operation, and will need quite some time to be normalized into operations. There would not be an overnight impact on the way we have been operating,” said Rajagopal Menon, vice-president of marketing at homegrown crypto exchange, WazirX.
On this note, however, Aggarwal said that FIU registration does not necessarily imply “legitimacy.”
“The legitimacy debate has been ongoing ever since the tax announcements in India. Many perceived that the implementation of tax was giving legitimacy to crypto businesses. The same debate came in when Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT) frameworks were put in place. These are nothing but safeguards built on our mandates—the legitimacy will come from licensing. This piece, which will come from a crypto regulation, is still missing. Policymakers and the Indian government will decide that. FIU’s mandate is not to give the crypto industry legitimacy,” he added.
