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India Issues Notices to 9 Offshore Crypto Exchanges for Illegal Operations

The Indian Ministry of Finance has issued show-cause notices to nine offshore cryptocurrency exchanges for operating unlawfully in India and allegedly flouting local anti-money laundering laws.

Non-compliance with PMLA Regulations

According to an official press release here, the exchanges – Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global and Bitfinex – have been accused of not complying with the Prevention of Money Laundering Act (PMLA) of 2002.

Virtual digital asset (VDA) service providers like cryptocurrency exchanges are required to register with the Financial Intelligence Unit-India (FIU-IND) to operate legally in India. However, most of the offshore exchanges named in the notices have failed to do so.

Move to Block Exchange URLs

The finance ministry has called for the blocking of the exchanges’ URLs since they are operating illegally without registering with FIU-IND and complying with India’s anti-money laundering laws.

According to the press release, registration and compliance with PMLA regulations are mandatory for virtual digital asset service providers regardless of their physical presence in India.

TDS Policy Spurs User Exodus

The crackdown comes after India’s 1% tax deducted at source (TDS) policy on cryptocurrency transactions that came into effect in July reportedly led millions of Indian users to migrate to offshore exchanges. As per a report, one exchange alone saw over 450,000 new Indian sign-ups in a single month post the TDS implementation.

However, only 31 virtual digital asset service providers have registered with FIU-IND so far, leaving several offshore entities serving a significant number of Indian crypto traders and investors out of the regulatory purview.


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