India’s Financial Intelligence Unit (FIU-India) is taking significant steps to open its doors to more offshore cryptocurrency exchanges, with a focus on compliance and transparency. As early as March 2025, four exchanges are reportedly under review to resume operations in India, following in the footsteps of Binance and Kucoin, both of which recently regained access after satisfying stringent anti-money laundering (AML) requirements. This development highlights India’s cautious yet evolving stance toward the crypto sector, which had previously faced regulatory hurdles.
The FIU-India is laser-focused on ensuring compliance with its stringent AML laws. According to a source closely connected to the review process, the core issue under scrutiny is transaction transparency and the reporting of suspicious transactions, which remain critical in the battle against illegal financial activities. The source mentioned that this review process isn’t a mere formality but a rigorous examination aimed at preventing financial crimes.
In recent months, Binance and Kucoin have successfully navigated the regulatory maze and have been reinstated as Virtual Asset Service Providers (VASPs) in India. This status comes with the responsibility of providing full transaction visibility to Indian authorities and implementing a solid framework for reporting any suspicious financial behaviour. Both exchanges had to address non-compliance issues before re-entering the Indian market, with Kucoin paying a fine of Rs 35.5 lakh (~$43,000) and Binance facing a much steeper penalty of $2.25 million (₹18.8 crore). Their return to India was only possible after these exchanges demonstrated a commitment to adhering to India’s financial regulations.
The FIU-India is determined to ensure that any crypto exchange operating in the country meets the highest standards of compliance. An official confirmed that this involves a thorough review of transaction visibility, reporting mechanisms, and other critical factors before granting permission for operations. As the official pointed out, “Only after complete due diligence will we allow any crypto exchange to operate in India. We are very strict about compliance.”
The rigorous approach taken by FIU-India isn’t just a barrier for offshore exchanges, but a necessary measure in the global fight against money laundering and other financial crimes. Given the anonymous nature of many crypto transactions, it’s easy for them to be misused for illicit purposes. The Indian government has been keen to strike a balance between allowing technological innovation and protecting the financial ecosystem from misuse.
Earlier bans on several offshore cryptocurrency exchanges, including Binance and Kucoin, were initially put in place to safeguard the integrity of the financial system. However, as the crypto industry matures, India is now shifting to a more flexible stance. Rather than completely blocking offshore exchanges, the focus is on ensuring they adhere to national financial laws.
The involvement of the FIU-India in the review of offshore exchanges is significant because this agency plays a crucial role in the country’s financial surveillance network. As India’s primary agency for tracking suspicious financial activities, it ensures that the crypto exchanges meet compliance standards in areas such as transaction monitoring and reporting. The agency’s involvement also sends a strong message to the global crypto community: access to India’s burgeoning market comes with conditions, and any non-compliance will be met with serious consequences.
For Binance and Kucoin, the road back to the Indian market was paved with challenges. Both exchanges had to prove their commitment to transparency and regulatory compliance before they were allowed to resume operations. In the case of Kucoin, a website ban was lifted after the exchange resolved non-compliance issues and paid a fine. Binance’s return came at a much higher cost, with the company being fined $2.25 million for AML violations. Yet, both exchanges emerged from this regulatory storm with the opportunity to re-establish their presence in India, marking a significant moment for the country’s crypto landscape.
The broader question is how India’s approach to offshore exchanges will influence the wider crypto market. While India has taken a hard stance on non-compliance, it also acknowledges the potential of cryptocurrencies and blockchain technology to transform industries and financial systems. However, the country is unwilling to compromise on its laws, especially when it comes to combating financial crimes like money laundering and terrorist financing.
The upcoming review of the four offshore exchanges is likely to follow the same stringent criteria that Binance and Kucoin faced. These exchanges will have to meet the requirements set out by the FIU-India, including appointing a compliance officer registered with the agency. This role is critical, as it ensures that the exchange has a direct line to Indian authorities and is capable of promptly reporting any suspicious activity.
It’s worth noting that the process for offshore exchanges to gain approval in India isn’t a one-size-fits-all approach. Each exchange is evaluated on its own merits, and the decision to allow them to operate is based on their ability to meet India’s regulatory standards. The FIU-India’s approach reflects its broader commitment to ensuring that the Indian financial system remains protected from illicit activity, while still allowing the country to participate in the rapidly growing global crypto market.
As the Indian government continues to refine its policies on cryptocurrencies, there is growing optimism that more offshore exchanges will be able to re-enter the market. However, this optimism is tempered by the understanding that compliance is non-negotiable. The FIU-India’s insistence on full transaction visibility, reporting of suspicious transactions, and adherence to AML regulations sets a high bar for any exchange looking to operate in the country.
The review process for the four exchanges currently under scrutiny will likely take some time, as the FIU-India ensures that every aspect of their operations is in line with national laws. If successful, this could open the door for more offshore exchanges to follow suit, potentially transforming the crypto landscape in India. For now, the focus remains on compliance and transparency, with the FIU-India playing a pivotal role in shaping the future of crypto in the country.
This cautious approach by India could ultimately serve as a model for other countries grappling with how to regulate cryptocurrencies. By focusing on compliance rather than outright bans, India is demonstrating that it’s possible to embrace innovation without compromising on financial integrity. The review process of these offshore exchanges will be closely watched, not just within India, but across the global crypto community. The message is clear: the door to India’s crypto market is open, but only for those who are willing to play by the rules.
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