The Financial Intelligence Unit-India (FIU-India), the national agency responsible for analysing suspicious financial transactions, will soon lift the ban on the world’s largest crypto exchange Binance after completing due diligence, a top government official said.
FIU-India lifted the ban on another offshore crypto exchange, KuCoin, in March after imposing a penalty ofRs 34.5 lakh.
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Vivek Aggarwal, director of FIU-IND and additional secretary in the Department of Revenue, said in his first-ever interaction with media that Binance proceedings were still ongoing as a penalty was yet to be decided.
“Binance’s operations have not yet resumed and the quantum of penalty is yet to be decided. Binance, as of now, has completed the initial registration with FIU-IND. Its penalty and compliance proceedings are still going on,” Aggarwal added, speaking at a workshop conducted by industry body Bharat Web3 Association (BWA) in New Delhi on May 10.
Binance’s registration comes close on the heels of rival KuCoinsigning up in March. Meanwhile, OKX decided todiscontinue its services in Indiafrom April 30.
In December 2023, around nine offshore exchanges including KuCoin, Binance, OKX,Houbiamong others were found to be not registered under FIU-IND and weren’t aligned with the provisions of the Prevention of Money Laundering Act (PMLA), 2002.
The nine entities are Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.
Following this, the government had ordered toblock theURLs of these exchangesin Indiain January. Even their apps were delisted fromthe Appleand Google’s app stores.
Virtual digital asset service providers, whether operating within or outside India, involved in activities such as virtual digital asset-to-fiat currency exchanges, virtual digital asset transfers, safekeeping or administration of virtual digital assets, or facilitating control over virtual digital assets, must register with FIU India as a 'Reporting Entity.' They are obligated to adhere to the stipulated requirements mandated under the Prevention of Money Laundering Act (PMLA) of 2002.
Last month, Changpeng Zhao, the former chief executive of Binance, was sentenced on Tuesday to four months in prison after pleading guilty to violating US laws against money laundering at the world's largest cryptocurrency exchange.
Once considered the most powerful crypto industry figure, Zhao, known as "CZ," is the second major crypto boss to be sentenced to prison.
It was also much lighter than the 25 years behind bars that Sam Bankman-Fried received in March for stealing $8 billion from customers of his now-bankrupt FTX exchange. Bankman-Fried is appealing his conviction and sentence, Reuters reported.
At the India Today Conclave held recently, Union Finance Minister Nirmala Sitharaman highlighted the dangers associated with unregulated crypto. She emphasised the risk of illicit activities such as terror funding and drug financing due to inconsistent regulation across nations.
New Delhi declaration on crypto
During its G20 presidency, India was able to gather consensus around creating a global regulatory framework for crypto-assets.
G20 countries endorsed Financial Stability Board’s (FSB’s) high-level recommendations for the regulation, supervision and oversight of crypto-assets activities and markets and of global stablecoin arrangements.
and called for the swift implementation of the Crypto-Asset Reporting Framework (CARF) and amendments to the ‘Common Reporting Standard’ (CRS).
CARF provides for the reporting of tax information on transactions in crypto assets in a standardized mannerwith a view to automatically exchangingsuch information with the jurisdictions of residence of taxpayers on an annual basis. Now, crypto transactions undertaken by Indians on foreign-domiciled crypto exchanges will come under the purview of automatic exchange of information protocol under CARF, and as such it will no longer be possible to hide or conceal such crypto transactions.
Bitcoin price falls
The price of bitcoin (BTC) fell sharply in the US morning hours on May 10, reversing a move that had seen the world's largest crypto climb as high as $63,500.In a reminiscence that evokes bittersweet memories, Bitcoin seems to take a step back, reaching trading levels we haven’t seen since 2014.
As good of an excuse as any for catalysts were disappointing US economic data and hawkish remarks from Dallas Fed President Lori Logan. The University of Michigan Consumer Sentiment Survey for May tumbled to 67.4 from 77.2 previously. That missed economist forecasts for 76.0 by a mile. Perhaps more disturbingly, one-year inflation expectations rose to 3.5 percentfrom 3.2percent previously and against forecasts for 3.2 percent. It was only one week ago when Federal Reserve Chairman Jerome Powell scoffed at stagflation concerns, saying he was seeing neither the "stag" nor the "flation."
