Binance, Kucoin to make India return
Crypto giants apply for compliance; FIU sets stage for comeback
Crypto giants Binance and Kucoin that left India after a regulatory blockade are set for a comeback, after the global exchanges applied for registration and compliance in the country.
In December, India’s Financial Intelligence Unit (FIU) called for blocking web addresses of a number of global crypto firms which were not registered in the country, over concerns that some of them may be misused for money-laundering.
On Friday, FIU said that it has lifted Kucoin’s suspension after the exchange paid a fine of around $42,000, and is processing Binance’s application.
“We are yet to decide on the quantum of fine to be levied on Binance, and the process is likely to take some time,” said Vivek Aggarwal, director of FIU, which comes under the finance ministry. “They have gotten registered with us, as part of a twostep process. The second step is to complete compliance proceedings after an order from FIU. Kucoin’s proceedings have been concluded, and they are now as compliant as an Indian virtual assets service provider (VASP),” Aggarwal said after meeting
Binance
Kucoin
CRYPTO FACTS
FIU lifted Kucoin’s suspension after it paid a fine of $42,000
CoinDCX
WazirX
Source: Coinmarketcap
KUCOIN in India has just begun collecting tax on crypto trades
46 VASPs on Friday.
Crypto exchanges must register with regulators and comply with the Prevention of Money Laundering Act (PMLA), 2002 legislation, and FIU directives to be allowed to operate in India.
While many exchanges deregistered Indian users and stopped local operations after the FIU action in December, Binance, Kucoin and a
QUANTUM handful of others chose to apply for compliance, Aggarwal said. Among others, the exchanges are required to appoint a principal compliance officer with a local address and contact details. Aggarwal, however, clarified that the officer has “no requirement to be in India.”
Indian crypto exchanges, how
do not expect any immediate impact from the global ones resuming India operations.
“Kucoin has just begun collecting tax on crypto trades in India, but the taxation compliance is yet to be certified. This is a significant operation, and will need quite some time to be normalized into operations. There would not be an overnight impact on the way we have been operating,” said Rajagopal Menon, vice-president of marketing at homegrown crypto exchange, WazirX.
A second industry executive associated with homegrown crypto exchanges said on condition of anonymity that once Binance returns, local exchanges may see a dip in traffic.
“We have to remain cognizant of the fact that Binance is the world’s largest cryptocurrency exchange, with the highest liquidity reserves and the number of listed tokens on the exchange. Once they complete full compliance and resume operations, there will undeniably be a dip in traffic on the local exchanges in India,” the executive added.
The ban on Binance, the world’s largest crypto exchange, in particular, was seen as setback for India’s crypto exchanges. On 9 January,
reported that global exchanges were the biggest sources of cryptocurrency token liquidity for these exchanges, and the former’s suspension was expected to dry up liquidity.
Exchanges, however, were optimistic of an uptick in business, with WazirX and CoinDCX, India’s two largest cryptocurrency exchanges, stating at the time that the susever, pension would likely redirect more users to Indian exchanges. Interestingly, this also coincided with a surge in Bitcoin prices—which has since cooled off. Indian exchanges including the ones above claimed multi-fold increases in user registrations.
However, despite the ban on Binance and a surge in Bitcoin prices, local exchanges saw limited impact on their daily trading volumes.
As of 1 March, daily trading volumes on WazirX and CoinDCX were still down by 93% and 85% respectively, from their peaks exactly two years ago.
To be sure, the introduction of 30% tax on profits, and a 1% tax deducted on source on every crypto trade, triggered a drastic decline in crypto investments in India.
On this note, however, Aggarwal said that FIU registration does not necessarily imply “legitimacy.”