BENGALURU: A day after Financial Intelligence Unit (FIU) issued show cause notices to offshore crypto and virtual digital assets platforms including Binance for not complying with the Prevention of Money Laundering Act (PMLA) provisions, crypto exchanges said investors should always aim to have their assets on FIU-compliant entities.
In March 2023, crypto entities were included as reporting entities under PMLA, and exchanges lauded it saying it was the first step towards bringing formal regulations to the industry. “Several offshore entities catering to a major part of Indian users were not getting registered and coming under AML and CFT framework,” the ministry said in a statement.
The FIU has written to the Ministry of Electronics and Information Technology to block URLs of nine entities that are operating illegally. Till date, 31 VDA SPs (virtual digital assets service providers) have registered with the FIU.
“It is always a best practice when using funds on foreign exchanges, one should aim to move funds back to India. 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,” said Edul Patel, CEO of Mudrex.
Sumit Gupta, co-founder, CoinDCX, said the recent step from FIU to offshore VDA SPs will aid users and investors in risk mitigation, protecting them from potential scams and fostering development of a secure VDA ecosystem. Dilip Chenoy, Chairman, Bharat Web3 Association, urged users to opt for compliant exchanges to ensure their safeguarding.
The ministry added that both offshore and onshore VDA SPs that are engaged in activities like exchange between VDAs and fiat currencies, transfer of VDAs, among others, are required to be registered with FIU IND as Reporting Entity and comply with the set of obligations.