India to Block 9 Offshore Virtual Digital Asset Service Providers

The Financial Intelligence Unit India (FIU IND) aims to block the URLs of nine offshore virtual digital asset service providers (VDA SPs).

The regulator has also issued show cause notices to the nine VDA SPs under the Prevention of Money Laundering Act (PMLA), according to a Thursday (Dec. 28) press release posted by the Government of India’s Press Information Bureau.

The nine entities targeted by these measures include Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global and Bitfinex, according to the release.

These VDA SPs are not complying with the PML Act in India, the release said.

“Virtual Digital Asset Service Providers (VDA SPs) operating in India (both offshore and onshore) and engaged in activities like exchange between virtual digital assets and fiat currencies, transfer of virtual digital assets, safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets, etc., are required to be registered with FIU IND as Reporting Entity and comply with the set of obligations as mandated under Prevention of Money Laundering Act (PMLA) 2022,” the release said.

“This obligation is activity-based and is not contingent on physical presence in India,” the release added. “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.”

While 31 VDA SPs have registered with the FIU IND, several offshore entities catering to Indian users have not done so, per the press release.

The subject of cryptocurrencies in India — which is the world’s sixth-largest economy — has seesawed between a full ban and the release of its own central bank digital currency (CBDC), PYMNTS reported in February 2022.

In October 2022, Indian Home Minister Amit Shah said that those responsible for drug smuggling and terrorism in the country are increasingly making use of the darknet and cryptocurrencies.

“Virtual Digital Asset Service Providers (VDA SPs) were brought into the ambit of Anti Money Laundering/Counter Financing of Terrorism (AML-CFT) framework under the provisions of the Prevention of Money Laundering (PML) Act, 2022 in March 2023,” the FIU IND said in its Thursday press release.