The Financial Intelligence Unit – India (FIU-IND) on October 1 issued notices to 25 offshore cryptocurrency exchanges for not registering in the country and being non-compliant to local anti-money laundering law.
Some of the names on the new list include Huione, Paxful, CEX.IO, Coinex, BitMex, Bitrue, CoinCola among many others.
This is a second list coming nearly two years after the regulators had sent out show cause notices to nine prominent offshore exchanges on similar grounds including Binance, KuCoin, OKX, Bybit and others.
What the FIU-IND said?
According to a statement released by the Ministry of Finance, the government has issued notices to the above mentioned entities with an order to takedown their application/URLs from public access. The applications “have been found to be operating illegally without complying with the relevant provisions of the PML Act, 2002 in India.”
Till date, around 50 VDA SPs (Virtual Digital Asset Service Providers) have registered with FIU IND.
“These obligations are activity-based and are not contingent on physical presence of the entity in India. The regulation casts reporting, record keeping, and other obligations on the VDA SPs under the PML Act which also includes registration with the FIU IND,” the Ministry said.
What’s a VDASP?
According to the Indian government, the Virtual Digital Asset Service Providers (VDA SPs) operating in India (whether offshore or onshore) are engaged in activities like exchange between virtual digital assets and fiat currencies, transfer of virtual digital assets, safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets etc.
These entities are required to be registered with FIU-IND as Reporting Entity and comply with the set of obligations as mandated under Prevention of Money Laundering Act (PMLA) 2002.
Government’s stance on crypto
While a discussion paper to regulate cryptocurrencies in the country is in works, the government remains wary of the potential risks the associated with the digital asset.
“It must be mentioned that the Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions,” the ministry said in the release.
