Indian Finance Ministry Issues Show-Cause Notices to Nine Offshore Crypto Platforms, Including Binance

The Indian Finance Ministry has taken a stern stance against offshore Virtual Digital Assets (VDA) service providers, issuing compliance show-cause notices to nine prominent platforms. Notable names in the list include Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. The finance ministry has also instructed the information technology ministry to block their URLs for allegedly operating illegally in India without adhering to local money laundering laws.

In a statement released on December 28, the finance ministry highlighted that both offshore and onshore VDA service providers engaging in activities like exchanging virtual digital assets with fiat currencies, transferring and administering virtual digital assets, or controlling them through instruments must register with the Financial Intelligence Unit-India. Furthermore, these entities are required to comply with the provisions of the Prevention of Money Laundering Act (PMLA), 2002.

The obligation outlined by the ministry is activity-based, emphasizing that it is not dependent on physical presence within India. The regulations impose reporting, record-keeping, and various other obligations on VDA service providers under the PML Act. The Financial Intelligence Unit-India serves as the national agency responsible for receiving, analyzing, and disseminating information related to suspicious financial transactions to enforcement agencies and foreign counterparts.

The finance ministry’s statement revealed that 31 virtual digital asset service providers have already registered with the Financial Intelligence Unit, highlighting the growing scrutiny and regulatory measures in the crypto space.