Indian Government Cracks Down on Offshore Crypto Exchanges: Compliance Show Cause Notices Issued

The Indian government has taken action against nine offshore cryptocurrency exchanges for non-compliance with the Prevention of Money Laundering Act (PMLA). The Financial Intelligence Unit (FIU), which operates under the Finance Ministry, issued compliance show cause notices to Binance, KuCoin, Huobi, Kraken,, Bittrex, Bitstamp, MEXC Global, and Bitfinex.

In addition to the notices, the government has initiated steps to block the URLs of these exchanges, citing their illegal operations without adhering to the provisions of the PMLA in India. However, the government did not provide specific details regarding the timeframe or consequences of non-compliance, as there are no previous crypto-specific precedents for such actions in the country.

This move comes after the government’s recent declaration that 28 domestic crypto service providers have registered themselves with the FIU. The number has since increased to 31, indicating a growing interest in complying with the PMLA regulations.

In March, India’s Finance Ministry mandated that crypto businesses must register with the FIU and adhere to other processes under the PMLA. This includes implementing verification procedures such as Know Your Customer (KYC). The FIU clarified that the obligation is activity-based and not contingent on physical presence in India. However, several offshore entities catering to a significant number of Indian users were not registering and operating outside the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework.

The government’s actions highlight its commitment to regulating the cryptocurrency industry and preventing money laundering and terrorist financing. By enforcing compliance with the PMLA, the government aims to ensure that crypto businesses operating in India adhere to the necessary regulations and contribute to a secure financial ecosystem.

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