Restarting India Ops: Offshore Crypto Exchanges are in Queue

Here are the exchanges that were banned:

1. Binance
2. Kucoin
3. Huobi
4. Kraken
5. Gate.io
6. Bitstamp
7. MEXC Global
8. Bittrex
9. Bitfenix

A senior government official stated, “Apart from Kucoin and Binance, we have received four more requests from the offshore crypto exchanges.” An email query sent to the Union Ministry of Finance remained unanswered at the time of writing.

In March, FIU-India lifted the ban on Kucoin after imposing a penalty of Rs 34.5 lakh. However, proceedings for Binance are still ongoing. The official mentioned, “We expect them to go live very soon.”

Before banning these exchanges on December 28, FIU-India issued show-cause notices for violating India’s anti-money laundering regulations. This regulatory action highlights India’s strict stance on crypto compliance.

Despite strict regulations and unfortunate taxation, India remains a significant market for crypto due to its growing grassroots adoption and Web3 developer activity. Sharat Chandra, co-founder of India Blockchain Forum, said, “India’s thriving grassroots crypto adoption and Web3 developer activity have made it a significant market that cannot be ignored. This has led offshore crypto exchanges to refocus on the Indian market.”

Currently, 46 crypto entities are registered in India. With Kucoin and Binance potentially rejoining, the number will increase to 48.

Global Regulatory Efforts and India’s Firm Stance on Crypto

Reserve Bank of India Governor Shaktikanta Das maintains a strong stance against crypto assets, even as the global trend moves toward regulation.

In September 2023, the International Monetary Fund (IMF) and the Financial Stability Board (FSB) published a synthesis paper.

This paper provides guidelines for countries on crypto regulations, covering areas like investor protection, cybersecurity, and anti-money laundering measures.

In October 2023, G20 finance ministers and central bank governors adopted the proposed road map on crypto assets. They called for its swift and coordinated implementation. The final communiqué from the meeting in Marrakech urged countries to implement policy frameworks, focus on global coordination, and share information.

The communiqué said that they asked the IMF and FSB to provide structured updates on the progress of the G20 Roadmap on Crypto Assets. They support the ongoing work and implementation of FATF standards globally on crypto assets.

Das highlighted the risks involved in crypto, as noted in the IMF-FSB synthesis paper. He explained that regulation exists on a scale. “Zero regulation means no regulation at all, and 10 means you don’t allow it.” Das said in October.

In summary, while India has a strict regulatory environment for crypto, its market potential remains significant. Ongoing efforts to regulate and coordinate globally show a move toward more structured crypto governance.