India’s Financial Intelligence Unit (FIU-IND) has intensified its oversight of the digital asset ecosystem. It announced the initiation of actions against 25 virtual asset service providers, including Huobi and KuCoin. This measure is due to alleged non-compliance with cryptocurrency regulation in India. The FIU is the official source of this information.
The agency’s directive involves more than just issuing compliance notices. Additionally, it has requested the Ministry of Electronics and Information Technology to block access to these platforms’ websites. This action aims to restrict their operations in the country. The move underscores an increasingly strict stance by local financial authorities.
Why Are the Rules for Exchanges Tightening?
The basis for this regulatory action is the Prevention of Money Laundering Act (PMLA) of 2002. In March 2023, the Ministry of Finance expanded the scope of this act. This expansion included virtual asset service providers (VASPs). Since then, registration with the FIU has become mandatory for all exchanges operating in the nation.
This regulation requires platforms to implement the same anti-money laundering protocols as traditional financial institutions. It includes customer identity verification (KYC), transaction monitoring, and reporting suspicious activities. The failure to comply with these guidelines is the direct cause of the recent crackdown, affecting the country’s digital economy.
Implications for the Crypto Market in India
This decision creates a new scenario for investors and companies in the sector. The exclusion of major international platforms could limit options for local users. However, it could also strengthen exchanges that do comply with local regulations. These platforms are expected to see an increase in their user base.
In the long run, these measures aim to create a safer and more transparent cryptocurrency market. The strict cryptocurrency regulation in India is intended to protect consumers and prevent illicit activities. The future of the sector will depend on the ability of exchanges to adapt to this increasingly defined and demanding regulatory framework.
