• The Indian government, through its Financial Intelligence Unit (FIU), issued show cause notices for compliance to nine offshore cryptocurrency exchanges under the Prevention of Money Laundering Act (PMLA).
• In March, India mandated KYC procedures and registration with the FIU for crypto companies, requiring Virtual Asset Service Providers (VASPs), whether domestic or offshore, to register as reporting entities and comply with the PMLA.
• While 31 entities have registered with the FIU, some offshore entities serving Indian users failed to register, leading to the issuance of show cause notices, which include URL blocking for non-compliance.

On Thursday, the Indian government, through its Financial Intelligence Unit (FIU) under the Finance Ministry, revealed the issuance of show cause notices for compliance to nine offshore cryptocurrency exchanges under the Prevention of Money Laundering Act (PMLA).

India to Ban Offshore Exchanges

In March, India mandated that crypto companies must conduct know-your-customer (KYC) procedures and register with the Financial Intelligence Unit (FIU) as part of its efforts to integrate crypto into the traditional finance sector. 

As per the mandate, any Virtual Asset Service Provider (VASP) operating in India, whether domestic or offshore, is required to register as a reporting entity and comply with the Prevention of Money Laundering Act (PMLA). 

(Read more: Check out the recent VASP-registered entities here in the Philippines.) 

According to the press release, 31 entities have already registered with the FIU, however, some offshore entities serving a substantial portion of Indian users have failed to register and comply with the Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) framework.

Following this, the recent issuance of show cause notices includes URL blocking for non-compliance. 

On the other hand, in 2022, the Fintech Department of the Reserve Bank of India unveiled a Concept Note on Central Bank Digital Currency (CBDC), announcing the initiation of a limited pilot for the digital Rupee (e₹) in specific use cases. The digital Rupee is designed to offer a more convenient, faster, and cost-effective alternative to existing forms of money.

Three out of nine exchanges were among the most popular platforms in the Philippines.

The Nine Exchanges

Binance

Binance, one of the world’s largest and most popular cryptocurrency exchanges, was founded in 2017 by Changpeng Zhao. The exchange recently reported that this year it had reached 170 million users, attracting 40 million new users, marking a nearly 30% growth.

Recently, in response to a money laundering case brought by the U.S. Commodity Futures Trading Commission (CFTC), a U.S. court has approved significant penalties against Binance and its former CEO, Changpeng Zhao. The court imposed a $150 million civil monetary penalty on Zhao, and Binance is required to disgorge $1.35 billion in ill-gotten transaction fees, along with a $1.35 billion penalty to the CFTC as part of the settlement.

In the Philippines, the firm is also facing regulatory challenges. Following this, Securities and Exchange Commission (SEC) Commissioner Kelvin Lee clarified the impending ban on Binance and other unregulated exchanges. 

KuCoin

KuCoin, founded in 2017, is a global cryptocurrency exchange that offers a variety of trading options to its users, including spot, margin, futures, and P2P trading, along with lending and staking. As of its Q2 2021 report, the exchange has over 10 million registered accounts.

Huobi

Huobi is a cryptocurrency exchange founded in 2013 and headquartered in the Seychelles. The platform offers nearly 400 cryptocurrency trading pairs and has expanded to more than 130 countries. Huobi also has its own token, Huobi Token (HT), which can be used to trade for other cryptocurrencies on the platform. According to a review by The Crypto Breakdown, Huobi has more than 20 million users.

Earlier this year, the exchange was linked to an issue regarding unauthorized listings of $Pi on different exchanges.

Kraken

Kraken, founded in 2011, is the world’s third-largest cryptocurrency exchange, handling a daily trading volume of $333 million. It supports over 200 cryptocurrencies and 600 pairs, offering services such as over-the-counter trading and personalized account management for institutions. Users in over 190 countries can access Kraken including the Philippines.

In February, the exchange paid a $30 million settlement to the U.S. SEC to settle charges of offering an unregistered sale of securities through its staking-as-a-service program.

Gate.io

Gate.io is a cryptocurrency exchange that facilitates the trading of over 1,700 cryptocurrencies. It is one of the world’s first exchanges to guarantee 100% Proof of Reserves, which allows users to independently verify their deposited assets.

According to CoinMarketCap, Gate.io has a trading volume of $1,394,738,370.21 in the last 24 hours and over 12 million users primarily in Europe and Asia. Filipino users can access this exchange as of writing. 

Bittrex

Founded in 2014, Bittrex is a U.S.-based cryptocurrency exchange known for its rapid trade execution, reliable digital wallets, and robust security measures. The platform supports over 250 cryptocurrencies and stablecoins for buying, selling, and trading. 

Notably, as of April 30, 2023, all Bittrex operations in the United States have been discontinued. Additionally, the platform ceased trading on December 4th, and customers are advised to finalize all transactions as only withdrawals will be available after that date.

Bitstamp

Bitstamp, established in 2011 and headquartered in Europe, is the world’s longest-running cryptocurrency exchange. With over 4 million customers across 100 countries, Bitstamp facilitates trading between fiat currencies, Bitcoin, and various cryptocurrencies, including USD, EUR, GBP, Ethereum, Litecoin, Ripple, Bitcoin Cash, Algorand, Stellar, and USD Coin.

In March, Bitstamp announced the launch of its white-label service, “Bitstamp as a Service,” for selected institutions in the Asia Pacific Region (APAC), including the Philippines. This initiative aims to assist various entities such as crypto exchanges, investment firms, banks, and payment processors in the region by streamlining and simplifying their digital asset services. 

MEXC Global

MEXC, founded in 2018, is a cryptocurrency exchange with a user base of over 10 million in 170 countries, MEXC provides a diverse range of trading options, supporting over 1,000 cryptocurrencies and more than 400 trading pairs. The exchange offers spot, margin, and futures trading with leverage up to 100x. 

MEXC operates globally and is regulated directly or through affiliates in prominent jurisdictions.

Bitfinex

Bitfinex, established in 2012 and based in Hong Kong, is a cryptocurrency exchange that offers a variety of digital coins for trading, including Bitcoin, Ethereum, Litecoin, and more. 

This article is published on BitPinas: India to Block Binance, Kraken, More Unlicensed Exchanges

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