India’s FIU considers approving two more foreign crypto exchanges

Following Binance and KuCoin, two more offshore cryptocurrency exchanges are expected to receive approval from India’s financial regulator by March 2025.

India’s Financial Intelligence Unit is reviewing registration requests from four offshore exchanges, people familiar with the matter told a local media outlet. The names of the platforms were not disclosed, but the source said two of the entities could be allowed to operate by the end of Financial Year 2025.

Last year, the FIU sent show-cause notices to nine foreign cryptocurrency exchanges, namely Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. According to the regulator, these platforms failed to meet registration requirements and were not compliant with the country’s anti-money laundering rules.

Subsequently, as part of the crackdown, Indians were prevented from accessing the affected platforms’ websites and mobile apps, in accordance with India’s Prevention of Money Laundering Act. The blocking follows a March 2023 order by the Indian Finance Ministry requiring crypto exchanges to register with the FIU as reporting entities.

According to the source, the two exchanges that have sought approval will undergo a “thorough review of transaction visibility, suspicious transaction reporting, and other related issues” before being allowed to continue operating. They will also be subject to penalties based on the scale of their activities prior to the ban and the extent of their non-compliance.

“We will only allow any crypto exchange to operate in India after a complete due diligence. We are very strict on compliance,” the source added.

KuCoin became the first FIU-compliant exchange after paying a penalty of INR 34.5 lakh (approximately $41,000). However, this penalty was modest compared to the $2.25 million that Binance had to pay.

Singapore-based Bitget has been in active talks with the FIU, alongside other exchanges. At the time of writing, there were 48 registered crypto assets in India, including Binance and KuCoin.

Chainalysis has marked India as one of the fastest-growing crypto economies with the highest adoption rate by 2023. Therefore, it comes as no surprise that global crypto exchanges are aiming to get back into the booming market that is estimated to generate over $1 billion in revenue by 2023.

However, this may not be smooth sailing as forex exchanges are expected to be registered under India’s Goods and Services Tax regime, which could further increase operating costs. Binance was asked to pay $86 million to clear outstanding GST dues on trading fees collected from Indian customers before the December ban.