With the high adoption of cryptocurrencies globally, there has also been a subsequent increase in cryptocurrency exchanges platforms that allow users, traders, or investors to buy, sell, and store virtual currencies.
A crypto exchange works exactly like a stock exchange, helping users trade in digital currencies such as Bitcoin, Tether, or Ethereum. These exchanges work on digital marketplaces like desktop functions similar to e-brokerages or mobile applications. Cryptocurrency exchanges also provide users with an array of trading and investing tools.
In the latest development on cryptocurrency exchanges domestically, the Indian government has blocked the URLs of nine cryptocurrency exchanges in India. Here’s all you need to know.
India’s Financial Intelligence Unit (FIU) Ban URLs of Certain Crypto Exchanges
On Dec. 28, 2023, the Financial Intelligence Unit (FIU) sent a show cause notice to nine offshore crypto exchanges after they were found to be “illegally operating” and not compliant with India’s anti-money laundering law. The FIU, part of the Indian Finance Ministry, asked the Ministry of Electronics and Information Technology (MeitY) to block the URLs of the nine cryptocurrency exchanges in India.
The notice was sent to them by FIU for illegally operating in India. The nine crypto exchanges to get the notice include:
- Binance
- Huobi
- Kraken
- Gate.io
- Kucoin
- Bitstamp
- MEXC Global
- Bittrex
- Bitfenix
The notice states, “As a segment of compliance action against the nine offshore entities, FIU India (FIU IND) has issued compliance notices to the virtual digital assets service providers (VDA SPs) of the PMLA (Prevention of Money Laundering Act), 2002 under Section 13.”
The notice further reads, “The regulation casts record reporting and other obligations on the VDA SPs under the 2002 act, which includes registration with the FIU IND too.” Currently, 31 VDA SPs have completed their registration with FIU IND.
The rule states that virtual digital asset service providers, whether operating outside or within the country, are involved in activities such as virtual digital asset transfers, virtual digital asset-to-fiat currency, facilitating control over virtual digital assets, or safekeeping or administering virtual digital assets and need to register with FIU IND as a “Reporting Entity.”
They must also adhere to the stipulated requirements mandated under the PMLA of 2002. Nevertheless, many offshore entities serve a significant portion of Indian users, avoid registration, and fall outside the purview of the anti-money laundering (AML) and counter-financing of tourism (CFT) framework.
FIU India serves as the main national agency tasked with receiving, processing, analyzing, and sharing information about suspicious financial transactions with foreign financial intelligence units and enforcement agencies.
What Should Consumers Do To Mitigate The URLs’ Ban
Suppose you are still trading on an international platform that is not registered with FIU but is yet to be banned. In that case, it is advisable to move your assets to an Indian cryptocurrency exchange that is FIU-registered.
With inherent risks attached to trading on international platforms, the right approach is not to panic and sell your assets but to move them to an Indian exchange or your wallet.
Once they are in your wallet, you can easily swap or sell them.
Global Cryptos Face the Axe
The FIU banned cryptocurrency exchanges like Binance, Kraken, Kucoin, and others in India. The Director FIU IND wrote to the Secretary of Meity to block these exchanges as they were illegally operating without following the provisions of the PML Act in India.
In effect, Apple removed its applications from the Apple Store, and Google removed them from its Play Store in India. As foreign cryptocurrency exchange platforms are blocked, domestic exchanges are set to benefit from a surge in domestic registrations.
The offshore exchanges that have been banned include Bitstamp, Huobi, MEXC Global, Kraken, Gate.io, Bitfinex, and Bittrex. This action was taken in response to suspected disobedience of Indian anti-money laundering regulations. KuCoin and Binance later registered with FIU but had to pay a penalty.
KuCoin And Binance Registers With FIU-IND Post the Ban
As you can read above, KuCoin, an offshore cryptocurrency exchange, was banned along with eight other international exchanges for illegally operating in India.
KuCoin announced on March 23 that it had achieved compliance with the FIU-IND regulations. This declaration follows months after the exchange received a show-cause notice for failing to adhere to local anti-money laundering regulations.
The world’s largest cryptocurrency exchange, Binance, also becomes the exchange to register with FIU after its rival KuCoin, months after being banned from India for operating illegally.
After winning the registration approval, KuCoin paid a $41,000 (around INR 35.5 lakh) penalty to resume operations in India. On the other hand, after a hearing with the FIU, Binance is expected to pay a penalty to resume operations. The exchange settled with a $2.25 million fine and is set to restart its operations in India.
Note: The FIU banned KuCoin and Binance in India, but they later paid the penalty and registered with the FIU.
Crypto Exchanges that are not Banned in India
Currently, 31 crypto businesses in India are registered with FIU. Here is a list of the top cryptocurrency exchanges to which you can consider moving your crypto assets.
UnoCoin
Unocoin is one of India’s oldest and leading exchanges for buying, selling, and storing cryptocurrencies. When signing up, users can trade in eighty digital currencies on this platform along with free Bitcoins. Users can also refer and earn 15% of their transaction fees.
CoinDCX
CoinDCX is one of the transparent and safest crypto exchange platforms in India. The onboarding process is carried out safely, and various security checks are done through automated software applications such as biometrics. They also offer self-custody wallets for their users.
ZebPay
ZebPay is a well-known exchange among crypto investors for interest earnings on idle crypto holdings. It provides up to 8.5% returns for investors’ cryptocurrency fixed deposits. At present, the exchange is supporting 100-plus crypto coins with around 50 lakh registered users.
Mudrex
Mudrex was launched in 2018 to make cryptocurrency investing long-term and less risky. This exchange platform was one of the earliest to register with FIU in India and is 100% compliant with Indian users. The platform has two million plus invested users. Mudrex provides its users with the unique advantage of zero fees on crypto deposits.
CoinSwitch
CoinSwitch is one of the best crypto exchanges for beginners. Its straightforward user interface lets users trade over 100 cryptocurrencies for as low as INR 100. CoinSwitch also provides trading pairs of INR to the crypto rupee index, the benchmark index for measuring Indian rupee-based crypto market performance.
WazirX
WazirX is one of the fastest-growing exchanges in India with more than sixty lakh registered users. It is also known for its beginner-friendly interface and advanced trading charts, which are available across Android, web, iOS, and Windows applications. The platform offers various tradable pairs and coins at competitive prices.