FIU To Hear Pleas Of Seven Banned Crypto Platforms To Restart India Ops

The Finance Ministry’s Financial Intelligence Unit (FIU) will reportedly hear the petitions of seven offshore crypto platforms seeking to restart operations in India. 

Sources told Economic Times that the unit will hear the pleas of crypto exchanges such as Bitfinex, MEXC Global, Kraken, Huobi, Gate.io, Bittrex and Bitstamp later this week. It is pertinent to note that these platforms were banned for non-compliance with the Prevention of Money Laundering Act (PMLA).

“We are holding a hearing of the crypto exchanges this week and based on their submission a decision on the future course of action will be taken,” a senior official reportedly said. 

As per the report, the ban on the platforms will be revoked after these exchanges pay pending goods and services tax (GST), estimated to be around INR 2,900 Cr. 

In addition, sources reportedly said that the exchanges may be allowed to operate only after they agree to comply with PMLA provisions, including mandates related to registrations, KYC (know your customer) norms and reporting of suspicious transactions as well as payment of penalties. 

The report further noted that the quantum of fines will likely be determined after submissions by the seven exchanges. Additionally, it may reportedly “take a while” for these crypto platforms to commence operations again even after they agree to comply with PMLA laws. 

As if this was not enough, GST authorities are reportedly mulling plans to send notices to other foreign crypto exchanges that previously operated in India. The banned crypto exchanges may also be mandated to shift their servers to India as per Ministry of Electronics and Information Technology (MeitY) guidelines.

For the uninitiated, FIU oversees trade in virtual digital assets (VDA) and ensures compliance with the Prevention of Money Laundering Act (PMLA) and the VDA taxation framework. Under current laws, all crypto platforms have to mandatorily register as reporting entities to offer crypto trading services in India.

It is pertinent to note that the finance ministry last year issued notices to nine overseas crypto platforms for neither registering as a reporting entity nor complying with provisions of the anti-money laundering laws. Subsequently, FIU wrote to MeitY to block their websites and all these nine platforms disappeared from India overnight. 

Eventually, Binance, which was also banned, paid a fine of INR 18 Cr earlier this year and agreed to comply with local norms before resuming operations in India. As a result, the crypto giant went live in India.

It is said to have paid the fines and went live in the country again last month. 

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