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Financial Intelligence Unit Authorizes Binance and Kucoin to Become Virtual Asset Service Providers
The Indian Government Financial Intelligence Unit (FIU) approved offshore applications cryptocurrency exchanges Binance and Kucoin to save them as Virtual Asset Service Providers (VASP) for negotiation Indiaa senior government official said. Kucoin has paid a penalty of Rs 35.5 lakh for past lapses and the ban on its websites has been lifted. Meanwhile, the quantum of Binance’s liabilities is still being calculated, he said.
“SO Kucoin And Binance have registered with FIU India“We now have complete visibility of the transactions we need and the process of submitting STRs (suspicious transaction reports) will begin soon,” Vivek Aggarwal, director, FIU-IND, told reporters on Friday.
AND was the first to report in its April 18 edition that Binance, the world’s largest cryptocurrency exchange that was banned by the government in January, is set to return to India by paying a penalty of around $2 million.
Aggarwal, however, did not confirm the amount and said calculations were still underway.
He added that CRF Guidelines not requiring offshore entities to register a separate company in India, but “there must be a principal compliance officer who registers with the FIU, in India, and whose address and contact details are available to the FIU for interaction.”
Asked about the case of individual investors who carried out illegal transactions on offshore platforms and evaded taxes for nearly two years before the ban, the official said such transactions need to be investigated.
“If the platform operates illegally, the investors also operate illegally. It is necessary to check whether a legitimate transaction took place, where the money comes from, whether it goes through a banking channel and whether it is declared in the tax return of the taxpayer concerned,” he said.
He was speaking at a joint workshop organised by FIU and Bharat Web3 Association, an industry body representing cryptocurrency exchange companies such as CoinDCX, WazirX, Mudrex and other web3 players.
In January, Binance was among the nine offshore cryptocurrency platformsnamely Kucoin, Huobi, OKX, Gate.ioBittrex, Bitstamp, MEXC Global and Bitfinex will no longer be able to operate in India via web addresses and mobile apps. The government’s move was taken in response to the platforms’ failure to comply with FIU and anti-money laundering guidelines.
Among them, Bitstamp and OKX have ended their operations in India, while Gate.io and Kraken are still in talks with the FIU, Aggarwal said. Others have not responded to us, he added.
The FIU, which is tasked with monitoring the trading of virtual digital assets (VDA), will now have 47 registered entities engaged in trading or management of crypto assets in India.
On the debate around the legitimacy of crypto asset trading in India, Aggarwal said that legitimacy comes from licensing while FIU registration aims to preserve the financial security of the country.
“This is a debate that has been going on since the TDS was imposed on cryptocurrency transactions. The same debate took place during the implementation of the AML CFT framework. So this element is still missing.”
“I would say that if a company was protected against financial crime, then automatically, if not in terms of legitimacy, the system would at least have a little more credibility,” he said.
FIU and industry stakeholders will set up a task force to develop self-regulatory guidelines to ensure growth of VDA business in India and draw best practices from global regulators.
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(Originally published May 10, 2024)