The Financial Intelligence Unit-India (FIU-IND) has issued notices urging the Union government to block access to nine international cryptocurrency exchanges, including Binance, Bittrex, Huobi, and MEXC Global. These notices cite non-compliance with rules aimed at preventing money laundering. The FIU-IND, reporting to the Economic Intelligence Council led by the Union finance minister, issued compliance Show Cause Notices under the Prevention of Money Laundering Act. The director of FIU-IND has requested the Ministry of Electronics and Information Technology to block the URLs of these entities operating without complying with PMLA provisions in India.
Virtual Digital Assets Service Providers (VDA SPs), a category for cryptocurrency exchanges, have received these notices due to concerns about their non-regulated nature. The obligation for compliance with the PML Act, including reporting, record-keeping, and registration with the FIU-IND, is not contingent on physical presence in India. While 31 VDA SPs have registered with FIU-IND to date, offshore entities serving a significant portion of Indian users have neglected registration.
The identified entities facing potential access restrictions are Binance (with addresses linked to tax havens like Seychelles and Cayman Islands), Kucoin (linked from Seychelles and Singapore), Huobi (Hong Kong and Singapore), Kraken (British Virgin Islands), Gate.io (Cayman Islands), Bittrex (United States), Bitstamp (Luxembourg, London, British Virgin Islands, and New York), MEXC Global (Singapore and Seychelles), and Bitfinex (British Virgin Islands).
Cryptocurrencies, including Bitcoin and Ether, have raised concerns globally due to their unregulated nature, viewed as a threat to financial stability by officials and regulators in various countries. The move to block access underscores the government’s commitment to enforcing regulations and preventing illicit financial activities associated with virtual currencies. The ongoing challenge lies in balancing the evolving landscape of digital assets with regulatory frameworks to ensure a secure and compliant environment for users.
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