Govt call to restrict access to 9 cryptocurrency exchanges

New Delhi, December 29: The Financial Intelligence Unit-India (FIU-IND) has taken a stringent stance, urging the Indian government to block access to nine offshore cryptocurrency exchanges. In an official statement released on Thursday, FIU-IND highlighted the non-compliance of regulations aimed at curbing money laundering, citing these exchanges' failure to adhere to stipulated rules.

Under Section 13 of the Prevention of Money Laundering Act, 2002 (PMLA), FIU-IND issued compliance Show Cause Notices to nine Virtual Digital Assets Service Providers (VDA SPs), as classified by cryptocurrency exchanges like Binance, Bittrex, Huobi, and MEXC Global, among others. Reporting directly to the Economic Intelligence Council (EIC) led by the Union finance minister, the FIU-IND Director has petitioned the Ministry of Electronics and Information Technology (MeitY) secretary to block the URLs of these non-compliant entities operating outside the regulatory framework in India.

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Cryptocurrency exchanges fall under the category of VDA SPs, enabling users to transact in cryptocurrencies like Bitcoin and Ether. The unregulated nature of cryptocurrencies has raised widespread concerns among officials and regulators globally, considering them a potential threat to financial stability. Emphasising on the obligations imposed by the PML Act, the statement outlined the reporting, record-keeping, and registration requirements demanded of these exchanges, regardless of their physical presence within India.

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Although 31 VDA SPs have registered with FIU-IND to date, numerous offshore entities serving a substantial Indian user base have sidestepped compliance with the agency's regulations.

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The nine entities targeted include Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. These entities operate from various global locations, including tax havens and international financial centers, prompting FIU-IND's call for stringent action to block their access within India.

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