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MeitY asked to block access to 9 overseas cryptocurrency exchanges

The Financial Intelligence Unit-India (FIU-IND) has issued notices urging the Union government to block access to nine overseas cryptocurrency exchanges, including Binance, Bittrex, Huobi, and MEXC Global. The action is based on allegations of non-compliance with rules aimed at preventing money laundering.

MeitY asked to block access to overseas cryptocurrency exchanges
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First Published Dec 29, 2023, 9:41 AM IST

In a significant development, the Financial Intelligence Unit-India (FIU-IND), a central agency, has issued notices and urged the Union government to block access to nine overseas cryptocurrency exchanges. Binance, Bittrex, Huobi, and MEXC Global are among the exchanges facing action due to alleged non-compliance with rules aimed at preventing money laundering, as per an official statement released on Thursday.

The statement from the finance ministry revealed, "Financial Intelligence Unit India (FIU IND) has issued compliance Show Cause Notices to the following nine offshore Virtual Digital Assets Service Providers (VDA SPs) under Section 13 of the Prevention of Money Laundering Act, 2002 (PMLA)."

FIU-IND, which reports directly to the Economic Intelligence Council (EIC) under the Union finance minister's leadership, has taken the step to address concerns related to the non-compliance of these exchanges with the provisions of the PML Act in India. The Director of FIU IND has written to the secretary of the Ministry of Electronics and Information Technology (MeitY) urging the blocking of URLs associated with these entities.

VDA SPs, a classification for cryptocurrency exchanges, facilitate the storage, purchase, and sale of cryptocurrencies like Bitcoin and Ether. Cryptocurrencies have raised concerns globally due to their lack of regulation, with authorities viewing them as a potential threat to financial stability.

The statement clarified that the obligations imposed on Virtual Digital Assets Service Providers are not contingent on physical presence in India. The regulations mandate reporting, record-keeping, and other obligations under the PML Act, including registration with the FIU IND.

While 31 VDA SPs have registered with FIU IND to date, the statement highlighted that several offshore entities catering to a substantial part of Indian users were not complying with registration requirements.

The nine entities facing action include Binance (linked to tax havens such as Seychelles and the Cayman Islands), Kucoin (linked from Seychelles and Singapore), Huobi (Hong Kong and Singapore), Kraken (British Virgin Islands), Gate.io (Cayman Islands), Bittrex (United States), Bitstamp (Luxembourg, London, British Virgin Islands, and New York), MEXC Global (Singapore and Seychelles), and Bitfinex (British Virgin Islands). The move underscores the growing regulatory scrutiny on cryptocurrency exchanges amid concerns about illicit financial activities.

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