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FIU Issues Notice To Binance, Kucoin & 7 Other Offshore Crypto Platforms

Indian investors should always aim to have their assets on FIU-compliant entities for better safety, says Edul Patel, CEO of Mudrex. 

The Financial Intelligence Unit (FIU) of the Finance Ministry issued notices to nine overseas crypto platforms on Thursday, including Binance and Kucoin, for not complying with provisions of the anti-money laundering laws. The show-cause notices have been issued to the platforms for not registering as reporting entities with the FIU. The unit has also written to the Ministry of Electronics and Information Technology (MeitY) to block the websites of the nine entities. 

Apart from Binance and Kucoin, the platforms under the radar of the authorities include Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfenex.

In an exclusive interview, Mr Edul Patel, CEO and Co-founder of Mudrex, a Global Crypto Investment Platform, says, “The Government of India has always supported fostering innovation and promoting responsible growth within the crypto industry. Its proactive measures, including the implementation of taxation, inclusion of cryptocurrencies in anti-money laundering/counter-terrorist financing (AML/CTF) frameworks, and issuance of notices to non-FIU compliant foreign entities, show its commitment to ensuring a safe ecosystem for investors and businesses”.

FIU India is tasked with processing, analyzing, and disseminating information about questionable financial transactions to enforcement agencies and foreign FIUs. Under existing rules, all onshore and offshore virtual digital asset service providers are mandated by law to register with the FIU as ‘reporting entities’ and comply with provisions of the Prevention of Money Laundering Act (PMLA), 2002.

The rules entail reporting, record keeping, and other obligations on the platforms and ensure they align with local laws. Curiously, reporting entities are mandated to file annual statements of financial transactions with the Income Tax Department, which include details of any reportable account maintained by a company during the year.

“Indian investors should always aim to have their assets in FIU-compliant entities like Mudrex as it gives them a localized experience and, more importantly, a way for legal recourse against fraudulent activity on their accounts”, added Mr Patel.

Crypto exchanges and VDA companies also have to maintain KYC details or records of identity documents of their users and clients, as well as account files and business correspondence with their clients.

“At Mudrex, we have created a seamless flow for users to transfer their funds from popular foreign exchanges by enabling instant KYC verification, support for crypto deposits across 100s of tokens, and direct withdrawal to bank accounts. We have done all of this while adhering to the highest safety and compliance standards”, he said.

Regarding the move, Mr Patel said, “This regulatory push by FIU provides investors an opportunity to transfer their assets from foreign exchanges to FIU-compliant entities in India. As India continues to position itself as a welcoming hub for crypto innovation, these moves collectively pave the way for a vibrant and sustainable future for the digital asset ecosystem”.

Currently, there are about 31 FIU registered platforms in India, including Mudrex, CoinDCX, WazirX, CoinSwitch, Zebpay, and others. 

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