India Cracks Down on Offshore Crypto Exchanges
India has intensified its regulatory enforcement against offshore crypto platforms without proper authorization. The Financial Intelligence Unit-India (FIU-IND) has issued notices to 25 offshore cryptocurrency exchanges for continuing operations without registering under the Prevention of Money Laundering Act (PMLA), 2002. This action marks another significant step in the country’s efforts to bring digital asset service providers under regulatory oversight.
FIU-IND Targets Offshore Crypto Exchanges for Non-Compliance
The platforms that received notices include Huione, Paxful, Changelly, CEX.IO, LBank, BingX, PrimeXBT, CoinEx, Poloniex, BitMex, Bitrue, HitBTC, BTCC UK, Remitano, LCX, Probit Global, BTSE, AscendEx, Phemex, ZooMex, CoinCola, CoinW, YouHodler, LocalCoinSwap, and CoinEx. These exchanges allegedly continued serving Indian users despite lacking the mandatory FIU-IND registration.
The regulatory body has taken a firm stance against unauthorized operations. Authorities have directed the Ministry of Electronics and Information Technology to block URLs and mobile applications of these non-compliant platforms. This approach mirrors previous enforcement actions taken by Indian regulators.
Understanding PMLA Requirements for Offshore Crypto Platforms
Virtual digital asset service providers were brought under PMLA regulations to strengthen anti-money laundering measures. Offshore exchanges must register with FIU-IND before offering services to Indian residents. The registration process requires platforms to establish compliance frameworks and adhere to know-your-customer protocols.
India’s regulatory framework treats cryptocurrency platforms as reporting entities under money laundering laws. This classification mandates strict adherence to transaction monitoring and suspicious activity reporting. Exchanges operating without registration face potential blocking of their services in Indian territory.
Previous Enforcement Actions Shape Current Crackdown
This recent action follows a pattern established in early 2024. FIU-IND previously issued compliance notices to nine offshore exchanges, including Binance, KuCoin, Kraken, Huobi, Gate.io, Bitstamp, Bittrex, MEXC, and Bitfinex, before instructing authorities to block their URLs. Several of these platforms have since sought registration to resume operations.
The regulatory pressure has prompted some exchanges to pursue compliance. Platforms like Binance and KuCoin have reportedly applied for permission to restart operations in India. This demonstrates the commercial importance of the Indian market to global cryptocurrency exchanges.
Impact on Offshore Crypto Exchange Operations in India
The crackdown affects millions of Indian crypto traders who rely on these platforms. These exchanges have been widely used by Indian traders, providing access to multiple cryptocurrencies. Users may face difficulties accessing their accounts and funds during the transition period.
Domestic cryptocurrency exchanges that have secured FIU-IND registration stand to benefit from this enforcement. Registered platforms can operate legally while maintaining compliance with anti-money laundering requirements. The regulatory clarity may accelerate the shift toward compliant domestic alternatives.
The notices serve as a warning to other offshore platforms considering the Indian market. Compliance with PMLA regulations has become non-negotiable for exchanges seeking to serve Indian customers. The regulatory environment continues evolving as authorities balance innovation with consumer protection.
Conclusion
India’s approach reflects growing global consensus on cryptocurrency oversight. Regulators worldwide are implementing frameworks to prevent illicit financial activities through digital assets. The FIU-IND actions demonstrate a commitment to establishing a regulated cryptocurrency ecosystem.
Market participants should monitor developments regarding registration processes and compliance requirements. Offshore exchanges must evaluate whether to pursue registration or exit the Indian market. Traders should verify the platform’s regulatory status before conducting transactions.
