Crypto: Is India Ready To Reopen Its Doors To Offshore Exchanges?

India seems to understand that it is better to regulate the crypto sector rather than combat it. Facing legislative challenges, India’s Financial Intelligence Unit (FIU) is considering allowing several offshore exchanges to resume their operations, provided they adhere to strict anti-money laundering rules.

FIU-India: an inflexible enforcer for crypto

The FIU-India, acting as a vigilant financial sheriff in an India that is finally opening its doors to Chinese investments, is rigid on anti-money laundering rules. After having authorized Binance and KuCoin to resume their activities, it is now considering giving the green light to two other offshore exchanges by March 2025.

That said, be careful, it’s not a funfair. To earn this entry ticket, platforms must prove their transparency on transactions and report any suspicious activity. 

As an official says, “only after complete diligence will we authorize an exchange to operate“.

If exchanges want to set foot on Indian soil, they will also have to pay a hefty fee, like the $2.25 million fine imposed on Binance.

• Fine imposed on KuCoin: Rs 35.5 lakh (~$43,000);
• Fine imposed on Binance: Rs 18.8 crore (~$2.25 million);
• Return of exchanges expected by end of FY25.

Crypto under permanent surveillance

The FIU does not just have one eye, but both eyes fixed on the exchanges. Last December, nine exchanges, including Binance (BNB) and KuCoin, faced serious legal action for not complying with Indian laws. Their sites were blocked, but some, like KuCoin, quickly settled their dues to resume operations.

Today, the FIU is closely examining four new applications. For these platforms, resuming operations will require total compliance with the rules. And this strictness is not about to relax, as the FIU even plans to increase audits on already authorized platforms to avoid being deceived a second time.

By rethinking its crypto policy, India seems to want to control offshore exchanges while remaining firm on regulation.