India is reconsidering its stance on foreign crypto exchanges, with reports indicating that the Financial Intelligence Unit (FIU) may approve licenses for two offshore crypto exchanges by March 2025.
This development follows a crackdown on nine foreign exchanges, including major players like Binance and KuCoin, which were banned for non-compliance with anti-money laundering regulations.
The FIU is reviewing registration applications from four foreign exchanges, and while the specific names have not been disclosed, it is expected that two of them could be approved to operate in India by the end of the financial year 2025.
The Financial Intelligence Unit (FIU) in India is a government agency that tracks and analyzes financial transactions to spot suspicious activities, like money laundering or funding illegal activities. Its main job is to help the government catch financial crimes by collecting and studying reports from banks, businesses, and other financial institutions.
FIU stated that these exchanges, expected to gain license, will undergo a thorough review process, focusing on transaction visibility and suspicious transaction reporting before any permissions are granted.
The regulatory body has emphasized strict compliance, stating that only after complete due diligence will any crypto exchange be allowed to operate in the country.
In the past, the Indian government had blocked access to the websites and mobile applications of non-compliant exchanges as part of its enforcement actions under the Prevention of Money Laundering Act.
However, Binance and KuCoin have recently received regulatory approval to resume operations in India after addressing compliance issues.
Furthermore, the Indian government plans to release a public consultation paper on comprehensive cryptocurrency regulations in October 2024, aiming to gather input from industry experts and stakeholders on how to effectively regulate the growing crypto-assets sector.
In 2023, India ranked first globally in terms of grassroots crypto adoption according to the latest Global Crypto Adoption Index by Chainalysis.
This ranking is based on the extent to which people in the country use cryptocurrencies, including transactions through centralized and decentralized exchanges and decentralized finance (DeFi) platforms.
Despite challenges like high taxes on crypto gains, India has managed to surpass many wealthier nations in cryptocurrency transaction volume, making it the second-largest cryptocurrency market by volume worldwide.
