India Bans Binance and Kraken in Crackdown Targeting Illegal Crypto Exchanges 

The Indian regulator banned nine crypto exchanges on Thursday December 28 that the Financial Intelligence Unit (FIU) declared operating illegally within the country. The FIU revealed that it plans to block the websites belonging to the nine crypto exchanges.

The announcement by FIU portrays the latest regulatory twist to hit the crypto industry, confirming the request to prohibit their operations effectively. Binance and Kraken are among the crypto exchanges affected by the ban. 

Binance and Kraken Blocked in India’s Crackdown Against Illegal Crypto Operations

FIU is the agency involved in regulating financial activity in India. The Thursday statement indicated that the nine exchanges failed in their mandate to register with it, thereby operating illegally in India. 

The statement disclosed that the crypto exchanges were noncompliant with India’s anti-money laundering regulation and contravened provisions enshrined in the anti-terrorist financing law.  

In its statement, the FIU requested Electronics and Information Technology to block websites belonging to Binance, Kraken, Bitsamp, Huobi, and Bitfinex. Other crypto exchanges included in the prohibited list, including, MEXC Global, Kucoin, and Bittrex, would remain blocked until further notice. 

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India Regulator Accuses Crypto Exchanges for Non-compliance with Anti-money Laundering Regulations

FIU pointed to the 2002 Prevention of Money Laundering Act (PMLA), which requires all exchanges within the Virtual Digital Asset Service Providers (VDA SPs) to register their operations. The crypto exchanges should seek registration with the FIU IND as the reporting entity besides compliance with the PLMA 2002 provisions. 

The agency statement revealed that 31 VDA SPs have duly registered with the regulator. Nonetheless, it decried that a substantial number of Indians preferred using the unregistered exchanges, hence prompting the regulatory action. 

The move to ban the crypto exchanges constitutes the latest action undertaken by a national government from the top-ten largest economy category. The inclusion of Binance adds to its woes following the November decision by the US Department of Justice to impose a $4.3 billion penalty. 

India’s Bold Move Replicates US Action Against Binance

The Justice Department explained that it fined Binance in a guilty plea alongside the resignation of its long-serving chief executive Changpeng Zhao, who faces sentencing in 2024. It indicated that Binance was noncompliant with the anti-money laundering laws. 

The move by India illustrates its bold statement to reign control in the crypto industry. The move to block the banned crypto platforms will ultimately compel the exchanges into compliance. 

The crypto exchanges listed by FIU have had recent legal tussles with US regulators. Just like Binance, Kraken faces charges against it for offering unregistered securities. Crypto exchange Bittrex closed operations following the onslaught by the Gary Gensler-chaired Securities and Exchange Commission. 

Crypto executives are aware of the heightened scrutiny led by the US regulators that recently secured restrictions for Zhao exiting the country until his February sentencing. 

Editorial credit: WESTOCK PRODUCTIONS /

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