Indian Government Approves Binance and Kucoin as Virtual Asset Service Providers

The Indian government’s Financial Intelligence Unit (FIU) has made a significant move by approving the applications of offshore cryptocurrency exchanges Binance and Kucoin to register as Virtual Asset Service Providers (VASPs) for trading in India. This decision comes after months of deliberation and negotiations between the government and the exchanges.

Kucoin, one of the leading offshore exchanges, has paid a penalty of Rs 35.5 lakh for past non-compliances, and as a result, the ban on its websites has been lifted. On the other hand, Binance’s liabilities are still being calculated by the authorities. Vivek Aggarwal, director of FIU-IND, confirmed the registration of both exchanges and highlighted the importance of having full visibility of transactions through the STR submission process.

The return of Binance, the world’s largest cryptocurrency exchange, to India was first reported by ET in April. The exchange is set to pay a penalty of around $2 million to resume operations in the country. Aggarwal did not confirm the exact amount but emphasized the ongoing calculations.

The FIU guidelines require offshore entities to have a principal compliance officer registered with FIU India, ensuring transparency and accountability in their operations. Aggarwal also addressed the issue of individual investors who have been trading illegally on offshore platforms, stating that their transactions need to be thoroughly examined.

In January, the Indian government banned nine offshore cryptocurrency platforms, including Binance and Kucoin, for non-compliance with FIU and anti-money laundering guidelines. While some platforms have ceased operations in India, others are still in discussions with the authorities.

With the registration of Binance and Kucoin, FIU now oversees 47 entities engaged in trading or handling crypto assets in India. Aggarwal emphasized the importance of licensing and FIU registration in ensuring the financial security of the country.

To promote the growth of the virtual digital assets (VDAs) business in India, FIU and industry players will establish a working group to develop self-regulatory guidelines and learn from global best practices. The debate around the legitimacy of crypto assets trading in India continues, but steps are being taken to enhance the credibility and security of the system.