The Indian government has issued show cause notice to nine popular offshore virtual digital assets service providers under the local anti-money laundering laws. The announcement yesterday (Thursday) further detailed that the Financial Intelligence Unit (FIU) ordered to blacklist the domains of the nine crypto exchanges as they are illegally operating in the country.

India to Block Top Crypto Exchanges

The names of the crypto exchanges in the notice are Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. All these exchanges are ranked at the top in terms of global crypto trading volume but do not have any authorization to operate in India.

“Director FIU IND has written to Secretary, Ministry of Electronics and Information Technology to block the URLs of said entities that are operating illegally without complying with the provisions of the Prevention of Money Laundering Act in India,” the notice stated.

Day 696

Multiple countries including India are getting serious about having a deeper regulatory control over crypto exchanges

We initially saw this with the US but now a lot more countries have started working towards greater regulatory clarity and control.

2024 will see a…

— Nischal (Shardeum) 🔼 (@NischalShetty) December 29, 2023

Registration Is a Must to Operate in the Country

Cryptocurrency exchanges are allowed to operate in India. However, the country imposed heavy restrictions on them under the local anti-money laundering laws. The local crypto exchanges have to deduct tax at the source for traders for every transaction. India has a 30 percent tax on crypto gains without the possibility of any offsets against losses in other asset classes.

“The obligation is activity-based and is not contingent on physical presence in India. The regulation casts reporting, record keeping, and other obligations on the VDA SPs under the PML Act, which also includes registration with the FIU IND,” the announcement added.

There are 31 registered crypto exchanges in India. However, according to the FIU, many offshore exchanges operate in the country without any registration cater to a “substantial part of Indian users.”