India's Financial Intelligence Unit Targets Global Crypto Exchanges; Prepares for 2024 Regulatory Framework
Summary:
India's Financial Intelligence Unit has issued compliance notices to nine international digital asset service providers, including global crypto exchange giants, accusing them of operating unlawfully and violating Anti-Money Laundering rules. In response to the growing popularity of cryptocurrency, India is set to unveil a regulatory framework for crypto in 2024, including enhanced KYC rules, real-time proof-of-reserve audits, a universal taxation policy, and categorizing crypto exchanges as authorized dealers.
The Financial Intelligence Unit of India has issued compliance notices to nine international providers of Virtual Digital Assets Services. Accusations cited include operating unlawfully and breaches of Anti-Money Laundering rules. The targeted companies include global crypto exchanges such as Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. In a public announcement made on December 28, the Unit asked the Ministry of Electronics and Information Technology to obstruct the URLs of these firms, likely to stop their websites from being reachable within the Indian territory. "Up to now, we have 31 VDA SPs registered with FIU IND. Yet, some foreign entities serving a significant portion of Indian users have not registered or complied with the Anti-Money Laundering and Counter Financing of Terrorism guidelines," the document states. In India, all providers of digital assets, both domestic and international, must fulfill certain regulatory requirements, such as being registered with the Financial Intelligence Unit as a Reporting Entity. Once registered, there are rules to follow as laid out in the Prevention of Money Laundering Act 2002. This includes obligations aimed at preventing money laundering actions, like adhering to Know Your Customer guidelines when enrolling clients. India has been recognized as the leading nation on Chainalysis' crypto adoption index of 2022, noting it as the second largest in terms of the raw estimated transaction volume worldwide, second only to the United States. This increased popularity of cryptocurrency has motivated Indian regulators to act. The nation is in the process of creating a regulatory framework for cryptocurrency reliant on the collaborative recommendations of the International Monetary Fund and the Financial Stability Board. This proposed framework, planned to be unveiled in 2024, is anticipated to incorporate enhanced KYC rules for digital currency companies and demand real-time proof-of-reserve audits. It is also expected to suggest a uniform taxation policy across countries and categorize cryptocurrency exchanges as authorized dealers, equivalent to banks, under the instructions of the Reserve Bank of India.
Published At
12/28/2023 8:29:03 PM
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