India Advances Crypto Regulations: Exchanges Register Under New Rules

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India Advances Crypto Regulations

India has taken a major step towards regulating cryptocurrencies by requiring exchanges and platforms to register with the government’s Financial Intelligence Unit (FIU) and adhere to strict Know Your Customer (KYC) rules. This article analyzes the new registration system, its applicability to offshore companies, and what it signals for the future of crypto in India.

Background of India’s Crypto Policy

India has had a complex relationship with cryptocurrencies. An initial draft bill in 2019 sought to ban crypto outright. However, a major Supreme Court ruling in 2020 overturned a banking ban, allowing growth of the sector. The latest rules signal regulation over suppression.

Past Regulatory Approaches

India has grappled with the best way to handle cryptocurrencies:

  • 2019: Draft bill proposed up to 10 years jail for holding cryptocurrencies
  • 2020: Supreme Court struck down an RBI banking ban on crypto
  • 2021: The government considered taxing cryptocurrencies as assets

The approaches shifted from outright ban to regulation and integration. The registration system marks a maturing regulatory outlook.

India Advances Crypto Regulations: New Registration System and KYC Rules

In March 2023, India’s Finance Ministry mandated that crypto aligns with Prevention of Money Laundering Act (PMLA) standards. This requires:

  • Registration with the Financial Intelligence Unit (FIU)
  • Strict Know Your Customer (KYC) protocols
  • Suspicious transaction reporting

These bring oversight of anti-money laundering activities to crypto exchanges and platforms.

Registration Process

The registration under PMLA involves providing business details, submitting ownership information, and designating compliance and grievance officers.

Following registration, exchanges must:

  • Verify user identity
  • Screen transactions
  • File suspicious activity reports
  • Maintain thorough records

India Advances Crypto Regulations: Progress So Far: 28 Entities Registered

The FIU has registered 28 domestic cryptocurrency entities so far:

ExchangeDate of Registration
CoinDCXNov 17, 2022
WazirXNov 21, 2022
CoinSwitchDec 1, 2022

The registration signals willingness for oversight from major Indian exchanges. However, no offshore companies have registered yet, though rules apply equally.

Quotes from Crypto Experts

Industry experts have commented on the significance of registering under the new regulations:

“It’s a good move providing Indian exchanges a level playing field” – Kashif Raza, Bitinning

“Dealing with unregistered platforms poses major financial risks“ – Sathvik Vishwanath, Co-Founder & CEO of Unocoin

“It’s crucial for consumer protection to know who stands behind an exchange” – Changpeng Zhao, Binance CEO

Crypto Regulations : Registration Means for Crypto's Future in India

What Registration Means for Crypto’s Future in India

Requiring registration and compliance with money laundering laws signals India aims to:

  • Tightly regulate the cryptocurrency sector
  • Foster legitimacy and transparency
  • Guard against illegal usage for crimes
  • Develop consumer protections

At the same time, India seems to accept that cryptocurrencies will remain available in a regulated framework, rather than an absolute ban.

Next Possible Policy Steps

With initial registrations underway, anticipated next steps may involve:

  • Registration requirements for global offshore platforms
  • Stricter Know Your Customer (KYC) processes
  • New tax policies and accounting/reporting rules
  • Consumer protection guidelines
  • Controlling speculative trading

Rules could shift based on factors like adoption rates, user feedback, and technology changes. Indication suggests regulated integration over the ban.

Frequently Asked Questions

Q: Which crypto entities have registered in India so far?

A: As of December 2022, 28 cryptocurrency platforms and exchanges have registered with India’s FIU, including prominent exchanges like CoinDCX, WaxirX, and CoinSwitch. No offshore companies are registered yet.

Q: What information do exchanges need to provide when registering?

A: The registration application requires submitting ownership details, designating compliance and grievance officers, as well as providing complete transparency into operations.

Q: How does PMLA registration impact users of Indian crypto exchanges?

A: Users will likely need to complete more robust know-your-customer (KYC) verification to use registered exchanges. Exchanges will also monitor transactions more closely for suspicious patterns.

Q: Does registration signal cryptocurrencies are fully legal in India now

A: No, more policy steps are likely coming. But following money laundering laws signals crypto will likely be regulated rather than completely banned. The legal status continues evolving.

Q: What happens if offshore exchanges like Binance don’t register?

A: The government says it will initiate action under PMLA if offshore platforms serving Indian users do not comply. However, penalties are still unclear.

Q: Will India ban or tax cryptocurrencies next?

A: Further policy steps are certainly possible, such as tax measures or consumer protections. But an outright ban seems unlikely given integration under PMLA. The approach indicates acceptance under regulation.

Q: What is the benefit of the new registration system?

A: Requiring registration adds much-needed oversight and transparency for exchanges handling millions in assets. It develops legitimacy and guards against fully anonymous actors.

Conclusion: Maturing Crypto Regulation

Requiring registration under anti-money laundering laws is a small but consequential step towards the regulated integration of cryptocurrencies in India. It signals tighter control but not suppression of crypto itself. Further policy evolution will likely happen incrementally, but the principled regulation shows India sees potential in crypto if wisely governed.

Disclaimer:

Cryptowini strives to provide accurate cryptocurrency news and analysis. Content on this site should not be considered investment or legal advice. The regulatory environment for digital assets in India remains fluid and subject to changes. You should carefully research and comply with all current regulations before trading or investing in any cryptocurrencies, tokens, or blockchain projects mentioned.

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Meet Devansh Saurav, CryptoWini's seasoned writer and finance expert. With over a decade in finance and a background in journalism, Devansh blends practical expertise and storytelling to unravel crypto intricacies. Follow him on CryptoWini for concise analyses, market trends, and engaging discussions bridging finance and crypto

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