India Set to Approve More Offshore Crypto Exchanges After Strict AML Compliance Review

• FIU-India plans to approve two more crypto exchanges by 2025, ensuring strict compliance with anti-money laundering laws.
• The approval process includes transparency checks and penalties for non-compliance, like the $2 million fine imposed on Binance.
• The DEA’s upcoming crypto legislation paper will shape India’s digital asset regulations and impact future exchange operations.

India’s Financial Intelligence Unit (FIU-India) is moving closer to allowing more offshore crypto exchanges to operate within the country. The FIU plans to approve two additional exchanges by the end of the 2025 fiscal year, pending a comprehensive review of their adherence to anti-money laundering (AML) laws. This development follows the FIU’s earlier approvals for Binance and KuCoin after the exchanges met the stringent AML requirements outlined by Indian regulators.

Strict Compliance Checks for Offshore Exchanges

The FIU’s decision to clear more exchanges stems from its ongoing assessment of four new applications from offshore exchanges. These platforms were previously banned due to non-compliance with India’s rigorous AML regulations. 

To gain approval, exchanges must demonstrate transaction transparency and adhere to Suspicious Transaction Reporting (STR) norms, ensuring their operations align with India’s financial laws. 

The FIU has already imposed penalties, including a $2 million fine on Binance earlier this year, before granting the exchange permission to re-enter the Indian market. This indicates that strict measures will be enforced to ensure full compliance.

Focus on Transparency and Accountability

The FIU’s move to permit additional offshore exchanges highlights the agency’s commitment to enforcing AML standards across the digital asset sector. The review process involves thorough checks to ensure that financial institutions maintain transparency and accountability. 

Although the names of the exchanges currently under review remain undisclosed, the FIU has reiterated its commitment to upholding Indian financial regulations. Any non-compliance could result in significant penalties or other legal consequences, reinforcing India’s stance on ensuring a well-regulated digital asset ecosystem.

Upcoming Regulations to Shape the Crypto Market

The decision to approve more exchanges comes at a crucial time for India’s growing crypto sector. The Department of Economic Affairs (DEA) plans to release a consultation paper on cryptocurrency legislation by October. 

This paper will seek input from industry stakeholders, which is expected to influence India’s long-term regulatory framework for digital assets. By opening the market to more compliant offshore exchanges, the FIU aims to foster competition, provide Indian investors with more options, and potentially boost liquidity in the domestic market.