Indian Government Approves Binance and Kucoin as Virtual Asset Service Providers

The Financial Intelligence Unit (FIU) of the Indian government has granted approval to offshore cryptocurrency exchanges Binance and Kucoin to operate as Virtual Asset Service Providers (VASPs) in India, according to a top government official.

Vivek Aggarwal, director of FIU-IND, confirmed that Kucoin has paid a penalty of Rs 35.5 lakh for past non-compliances, and the ban on its websites has been lifted. Binance’s penalty amount is still being calculated.

“We now have full visibility of transactions and will begin the process of submitting Suspicious Transaction Reports (STRs) soon,” said Aggarwal during a press briefing.

Earlier reports had indicated that Binance, the world’s largest cryptocurrency exchange, would return to India after paying a penalty of around $2 million. However, Aggarwal did not confirm the exact amount.

According to FIU guidelines, offshore entities like Binance and Kucoin are not required to establish separate businesses in India. However, they must appoint a principal compliance officer registered with FIU-IND for effective communication.

Aggarwal addressed concerns about individual investors who engaged in illegal trading on offshore platforms, emphasizing the need to study such transactions to ensure compliance with tax regulations.

In January, Binance and eight other offshore platforms were banned from operating in India due to non-compliance with FIU and anti-money laundering guidelines. Bitstamp and OKX have ceased operations in India, while Gate.io and Kraken are still in discussions with FIU. Other platforms have not responded.

Aggarwal highlighted the importance of FIU registration in safeguarding financial security and proposed the establishment of a working group with industry players to develop self-regulatory guidelines for the VDA business in India.

The approval of Binance and Kucoin brings the total number of registered VASPs in India to 47, signaling a shift toward regulatory compliance and oversight in the cryptocurrency sector.