Binance and Kucoin Approved by FIU to Return Operation in India. A Boost for the Crypto Market

In a significant development for the Indian crypto landscape, two major offshore crypto exchanges, Binance and Kucoin, have been granted approval to operate as Virtual Asset Service Providers (VASPs) by the Financial Intelligence Unit (FIU) of India. This move is set to shake up the country's crypto market, which has witnessed a rough journey amid regulatory uncertainties.

The FIU's approval comes after a period of scrutiny and a temporary ban imposed on these exchanges on January 1, 2024, due to concerns over money laundering activities and non-compliance with India's crypto laws. The ban was lifted after Kucoin paid a penalty of Rs 35.5 lakh for past non-compliances, while Binance's quantum of liabilities is still being computed.Vivek Aggarwal, director of FIU-IND, confirmed the registration of Binance and Kucoin, stating that they now have full visibility of transactions that they need, and the STR (suspicious transaction report) submission procedure will begin soon.

Vivek Aggarwal, director of FIU-IND, confirmed the registration of Binance and Kucoin, stating that they now have full visibility of transactions that they need, and the STR (suspicious transaction report) submission procedure will begin soon.

Roshan Aslam, CEO & Co-founder of GoSats, believes that Binance's entry into the Indian market will have a deep impact on the country's crypto ecosystem. As the world's largest exchange, Binance is expected to disrupt the market, especially in a country with one of the highest rates of crypto adoption globally.

"Binance is yet to complete the compliance steps with the Indian legislation - when they become VASP compliant and begin operations in India. Binance is the largest exchange in the world, and it will be a market disruptor, especially in one of the highest crypto-adapting countries in the world," Aslam said.

Suman Banerjee, CIO of the alternate investment platform Hedonova, highlighted the benefits for Indian investors, stating that Indian investors will gain access to a wider variety of crypto assets and trading opportunities as a result of this move. It also reflects a growing recognition of the potential benefits of crypto adoption within the Indian market. 

Also, Balaji Srihari, Business Head of CoinSwitch, commended the move as a positive step towards strengthening compliance and consumer protection in the Indian crypto market.Regulatory Clarity and Oversight

While the FIU's approval is a significant milestone, the debate surrounding the legitimacy of crypto assets trading in India remains ongoing. Vivek Aggarwal acknowledged this debate, stating, "I would say if any business were ring-fenced from financial crime, then automatically, if not legitimacy, there is at least a little more credibility to the system."

The FIU, tasked with overseeing trade in virtual digital assets (VDAs), now has 47 registered entities engaged in trading or handling crypto assets in India. Aggarwal also revealed plans to set up a working group with industry players to frame self-regulatory guidelines and ensure the growth of the VDA business in India, drawing best practices from global regulators.

As Binance and Kucoin prepare to launch their operations in India, the country's crypto market is set for a transformative phase. With increased access to a wider range of assets and trading opportunities connected with strengthened compliance measures, Indian investors may witness a new era of crypto adoption and investment opportunities.