India to Approve Two More Offshore Crypto Exchanges

India's Financial Intelligence Unit (FIU) is considering the reactivation of operations for two additional international crypto exchanges.

The FIU, which oversees Anti-Money Laundering (AML) compliance in India, is reviewing applications from four foreign exchanges previously banned for AML violations.

After granting registration approvals to Binance and KuCoin, the FIU is expected to approve at least two of the four pending applications by the end of FY25. The approval process involves a thorough examination of transaction visibility and reporting practices, according to unnamed sources.

Previously, India had restricted nine international crypto exchanges, including Binance, in January due to non-compliance with AML regulations. KuCoin and Binance have since met FIU requirements, while OKX has ceased operations in India.

Raj Kapoor of the India Blockchain Alliance anticipates that the inclusion of two more exchanges will significantly impact the Indian crypto market by boosting competition, enhancing trading options, and attracting institutional investors. This influx could lead to lower fees and increased liquidity but might also intensify regulatory challenges for local exchanges.

Additionally, the Department of Economic Affairs (DEA) is preparing a consultation paper on cryptocurrency legislation, expected by October. This paper will gather feedback from various stakeholders to shape future regulations.

India’s crypto sector is currently guided by a tax regime that includes a 30% tax on unrealized gains and a 1% tax on transactions. The government’s focus remains on AML and counter-terrorism financing, rather than regulating cryptocurrency transactions directly.