The Indian Ministry of Finance has sent notices to nine major offshore crypto exchanges, including names like Binance and Kraken, asking them to explain their actions and register with the Financial Intelligence Unit India (FIU IND) within a week.
Failure to register could lead to a potential ban on their website URLs, similar to how the Indian government previously carried out surgical strikes on Chinese apps and websites.
If the government indeed bans these foreign exchanges, they might have several options. As discussed in our previous article on the future of foreign cryptocurrency exchanges in India, the initial step would be registering with FIU IND.
However, a significant challenge is that Indian regulations may not apply globally. Even if offshore exchanges comply with these rules, they might encounter similar issues in other countries.
Therefore, one viable option for these exchanges would be establishing a separate entity within India. This would necessitate compliance with Indian regulations by that unit alone, sparing the entire crypto firm from global adjustments.
Creating a distinct entity might earn these exchanges the trust of the Indian government. Forming a separate entity in India could play a crucial role in job creation, potentially boosting the country's economy. Establishing a local team would be essential for these exchanges.
Additionally, they could collaborate with local experts in finance and officials knowledgeable about Indian cryptocurrency regulations or FIU IND guidelines. By engaging with Ministry of Finance or FIU officials, they could better understand ongoing actions and invest time to comply, potentially resolving the issue and gaining the government's trust.
However, setting up a separate entity in India might not be straightforward for larger exchanges like Binance and Kraken. Complying with the Ministry of Finance's regulations in India may prompt them to prepare for similar steps in other countries.
Currently, due to the lack of a common regulatory framework, each country operates within its own realm concerning cryptocurrency regulations. In the future, other countries might demand that these foreign exchanges establish entities within their borders, a challenging feat for any crypto exchange. However, India, being a significant market, might be an area these exchanges wouldn't want to abandon.
