Financial Intelligence Unit clears Binance and Kucoin to be Virtual Asset Service Providers

“So and have got registered with ,” Vivek Aggarwal, director, FIU-IND, told reporters on Friday. “We are now having a full visibility of transactions that we need and the STR (suspicious transaction report) submission process will start soon.”

was the first to report in the April 18 edition that Binance, the world’s largest cryptocurrency exchange that was banned by the government in January, is poised to return to India by paying a penalty of about $2 million.

Aggarwal, however, did not confirm the sum and said that calculations are still being made.

He added that FIU guidelines do not mandate offshore entities to register a separate business in India, but “there has to be a principal who gets registered with FIU, India, and whose address and details are available to FIU for interacting.”

When asked about the case of individual investors who have been illegally trading on and evading taxes for almost two years before the ban, the official said that those transactions need to be studied.

“If the platform is illegally operating, the investors are also illegally operating. It has to be seen if there is a legitimate transaction that has happened, from where the money has come, whether it is going through a banking channel, and whether it is declared in the tax return of the concerned taxpayer,” he said.

In January, Binance was among nine offshore cryptocurrency platforms, namely, Kucoin, , , , Bittrex, Bitstamp, MEXC Global and Bitfinex to be prohibited from operating in India through web addresses and mobile applications. The government's action was in response to the platforms’ failure to comply with FIU and anti-money laundering guidelines.

Of these, Bitstamp and OKX have wrapped up operations in India, while Gate.io and Kraken are still in conversations with the FIU, Aggarwal said. Others have not responded back to us, he added.

FIU, tasked with oversight of trade in virtual digital assets (VDAs), will now have 47 registered entities engaged in trading or handling of crypto assets in India.

On the debate around legitimacy of crypto assets trading in India, Aggarwal said that legitimacy comes from licensing while FIU registration is aimed at safeguarding the financial security of the country.

“This is a debate that has been going on since the TDS was imposed on crypto transactions. The same debate came in when the AML CFT framework was implemented. So that piece is still missing.”

“I would say if any business were ring fenced from financial crime, then automatically, if not legitimacy, there is at least a little more credibility to the system,” he said.

FIU along with industry players shall set up a working group to frame self-regulatory guidelines to ensure growth of VDA business in India and derive best practices from global regulators.

Source: Forex-Markets-Economic Times