About 28 Virtual Digital Assets (VDA) or crypto service providers have officially registered with the Financial Intelligence Unit (FIU) in India, as confirmed by the Indian Minister of State for Finance, Pankaj Chaudhary. This move comes in the wake of regulatory measures aimed at integrating the burgeoning crypto market into the nation’s financial oversight framework.
New compliance landscape for crypto businesses
The registration process was instigated following a mandate from India’s Finance Ministry in March, requiring all crypto businesses to align with the standards set by the Prevention of Money Laundering Act (PMLA). This pivotal decision effectively brought cryptocurrency exchanges and service providers under the ambit of India’s anti-money laundering regulations. As part of this compliance, entities are now required to implement stringent verification processes, including Know Your Customer (KYC) protocols.
The minister’s response to a parliamentary query highlighted the broader reach of these regulations, extending their jurisdiction to offshore crypto exchanges that provide services to the Indian market. The ministry’s stance is clear: failure to adhere to these guidelines by any offshore platforms operating in India will prompt action under the PMLA.
Domestic focus on FIU registrations
Notably, 28 entities that have complied with the new registration requirement include major domestic exchanges like CoinDCX, WaxirX, and CoinSwitch. However, it appears that none of these registered entities are offshore companies. This points to a focused approach by the Indian government to first ensure compliance among homegrown crypto businesses before turning its regulatory lens outward.
The move to bring crypto service providers under strict regulatory scrutiny marks a significant step in India’s efforts to balance innovation in the digital asset space with financial security and anti-money laundering measures. While these steps have been welcomed by some as necessary for the maturation and legitimacy of the crypto industry in India, others view them as a challenge to the inherently decentralized nature of digital currencies.
Overall, this new development signals India’s intent to maintain a tight grip on the sector, ensuring that the burgeoning digital asset market operates within the bounds of established financial regulations. The registration of these 28 entities with the FIU is just the beginning of a new era in crypto regulation in India, one that is likely to see further developments as the market continues to expand and evolve.