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India has intensified its efforts to regulate the crypto sector by clamping down on overseas exchanges, including Binance, that are allegedly operating illegally within the country.

The Financial Intelligence Unit (FIU) has issued compliance show-cause notices to several platforms, urging them to demonstrate adherence to Indian laws. Additionally, the information ministry has been requested to block the uniform resource locators (URLs) or web addresses of nine entities, restricting local access to their websites. 

These measures come as the Indian government strengthens its oversight of digital assets, implementing anti-money laundering (AML) provisions and imposing taxes on crypto transactions. 

Offshore Crypto Exchanges Under Scrutiny According to a Bloomberg report, The FIU, responsible for combating money laundering and terrorist financing, has issued compliance show-cause notices to prominent overseas crypto exchanges, including Binance, Kraken, KuCoin, Huobi,, Bittrex, Bitstamp, MEXC and Bitfinex.  

These notices serve as official requests for the entities to demonstrate their compliance with Indian laws and regulations. 

The move comes in response to concerns that offshore exchanges catering to Indian users were allegedly operating outside the AML and Counter Financing of Terrorism (CFT) framework.

India has been actively tightening its oversight of the digital asset sector, aligning itself with global efforts to combat financial crimes and protect investor interests. 

The introduction of money-laundering provisions on digital assets earlier this year reflects the government’s commitment to enforcing regulatory compliance. These measures aim to bring crypto exchanges and platforms under the purview of AML and CFT regulations, ensuring transparency and accountability in the sector.

Per the report, the imposition of taxes on crypto transactions in 2022 had a significant impact on local Indian crypto exchanges, causing trading volumes to plummet. 

Local exchanges have expressed concerns that the tax drove Indian crypto traders to offshore platforms that do not impose such levies, further diminishing their revenues. 

According to Bloomberg, CoinDCX CEO Sumit Gupta estimated that approximately 95% of trading volume has shifted to offshore venues, highlighting the challenges faced by domestic exchanges in attracting traders.

India’s Regulatory Crackdown Binance, the world’s largest crypto exchange, has faced mounting regulatory scrutiny globally, but In 2021, India’s anti-money laundering agency initiated an investigation into Binance’s potential involvement with betting apps. 

The recent compliance show-cause notice issued by the FIU adds to the regulatory pressure on the exchange. 

As previously reported by Bitcoinist, Binance has also faced legal consequences, as it agreed to pay $4.3 billion in fines for anti-money laundering and US sanction violations, leading to the resignation of its co-founder and CEO, Changpeng Zhao.

Overall, India’s increased crackdown on overseas crypto exchanges, including Binance, reflects the government’s commitment to strengthening regulatory oversight of the crypto sector, but it is stifling innovation and growth in the sector in the Asian country, as well as impacting users of the exchanges.

The 1-day chart shows the total crypto market cap’s valuation at $1.63 trillion. Source: TOTAL on Featured image from Shutterstock, chart from 

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February 2024


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