India Tightens Grip on Crypto Exchanges Amid Money Laundering Concerns

India plans to shut down Binance and eight other foreign exchanges

India's Ministry of Finance has sent compliance notices to Binance and eight other foreign crypto exchanges, accusing them of violating the country's anti-money laundering laws. The ministry's Financial Intelligence Unit (FIU) said in a circular on Dec. 28 that it had issued the notices to Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex, asking them to explain why they should not be penalized for operating illegally in India.

The FIU also announced that it would block access to the websites of these exchanges and other non-compliant Virtual Digital Assets Service Providers (VDASPs), in order to protect local investors from potential risks. The FIU said that its actions were in line with the Prevention of Money Laundering Act (PMLA), which requires crypto businesses to register with the FIU and follow its rules. As of Dec. 4, only 28 crypto firms had registered with the FIU, according to the circular.

The move reflects the ongoing uncertainty and debate over the regulation of crypto in India, where different authorities have expressed conflicting views on the emerging industry. While India's Minister of Finance, Nirmala Sitharaman, has advocated for a global approach to developing a crypto framework and recognized the benefits of blockchain technology, the Reserve Bank of India (RBI) has maintained its opposition to crypto and called for a complete ban on virtual currencies. The final decision on the legal status of crypto in India is expected to be made by the Supreme Court, which is hearing a case on the matter.