India Reconsiders Foreign Crypto Currency Registrations: Report

India's Financial Intelligence Unit (FIU) is reportedly planning to approve two more offshore crypto exchanges to start operations in the country.

The FIU – which is subject to Anti-Money Laundering (AML) in India – is reportedly investigating claims of four overseas crypto exchanges that were earlier banned for non-compliance with the country's AML rules.

Following the FIU registration approval for Binance and KuCoin, “We have received requests from four more offshore crypto exchanges to operate in India, and we expect at least two to be allowed to resume operations by the end of FY25,” local news outlets reported, citing an unidentified source.

“This is after a thorough review of the transaction visibility, suspicious transaction reporting and other related issues,” the source added.

India has banned nine crypto exchanges.

India's FIU blocked access to nine foreign crypto exchange URLs and mobile apps, including Binance, in the first week of January for non-compliance with the country's AML regulations.

So far, KuCoin and Binance are registered with India's FIU. On the other hand, OKX has closed its operations completely, citing the regulatory burden.

In the year On August 15, Binance announced that it had paid a $2 million fine and registered with India's FIU reporting body.

Speaking to Cointelegraph, India Blockchain Alliance founder Raj Kapoor said the clearing of two more offshore crypto exchanges to continue operations in India will have a major impact on the Indian cryptocurrency environment and a possible harbinger of what is to come in the crypto space. The move is expected to increase market competition by providing better business options and lower dependencies for Indian investors.

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Looking ahead, Kapoor expects lower fees and improved features as well as new products. He also expects improved liquidity in the Indian kriptovalyutnogo market, which makes it more attractive to institutional investors. However, this also has a flip side. Kapoor explained:

“Increasing competition will no doubt put pressure on local exchanges to improve their products, which could lead to regulatory issues as authorities try to maintain compliance and protect investors in a rapidly changing industry.

High dependence on support policies

India's cryptocurrency ecosystem may also change as the Department of Economic Affairs (DEA) prepares a key consultation paper on cryptocurrency legislation. The paper, which is expected to be released in October, seeks input from various stakeholders as the government plays an active role in shaping the future of digital currencies in India.

Raj Karkara, chief operating officer of ZebPay crypto exchange, told Cointelegraph that India's potential to become a major player in crypto depends on policies that support growth and technological advancement.

“By seeking input from industry experts, companies and the public, the government is working to not only enhance transparency, but also ensure that regulations are well-reinforced and reflect the needs and aspirations of stakeholders.”

In April 2022, India established its tax regime on cryptocurrency transactions: 30% untaxed crypto profits and 1% tax deducted at source for each crypto transaction. But the Indian government has refrained from regulating the sale and purchase of cryptocurrencies, preferring to focus on combating crypto-related money laundering and terrorist financing.

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