Regulation
Binance and KuCoin return to India after obtaining regulatory approval
Binance, the world’s leading cryptocurrency exchange, and its rival KuCoin made headlines as the first offshore crypto company to gain approval from India’s anti-money laundering watchdog. This development comes several months after they faced the ban on unauthorized operations inside the country.
Regulatory reconciliation and recovery
After a tumultuous period of legal barriers, Binance and KuCoin have both found their way back into the Indian market, as confirmed by a senior official of the unit. FIU-IND, a segment of the Ministry of Finance, is used in the fight against illicit financial activities.
KuCoin has already paid a fine of $41,000 and resumed its services. Meanwhile, Binance operations remain suspended pending the conclusion of their compliance procedure, where the final sanction will be determined.
Last year ended on a difficult note for these platforms, as they were among the nine offshore entities banned from operating in India. However, not all platforms worked smoothly. While Kraken, Gemini and Gate.io have started negotiation processes, OKX and Bitstamp are planning their exit from India.
Growth amid regulation
Despite these regulatory challenges, the cryptocurrency market in India has seen significant growth. In 2021, the market was valued at $73.8 million and is expected to almost double by 2025, to $123.2 million. By 2030, this amount could reach $241.1 million. The steady increase in crypto traders reflects a strong compound annual growth rate (CAGR) of 54.11% from 2024 to 2032, with the market potentially get to $343.5 million in 2024 alone.
The expansion of crypto in India and the government’s proactive stance towards fine-tuning crypto regulations are key factors behind this growth. The term “virtual digital assets” (VDA) has been officially adopted to include cryptocurrencies and non-fungible tokens (NFTs). Amendments to the Information Technology Act of 2000 mandated a stricter know your customer (KYC) process for new users of crypto exchanges.
Additionally, for an exchange to operate legally, it must not only register with FIU India but also maintain records of transactions for a period of five years. Incorporation into the Prevention of Money Laundering Act of 2002 classifies these exchanges as reporting entities, thereby strengthening the regulatory framework.