India's Financial Intelligence Unit is set to greenlight two more foreign crypto exchanges by the end of FY25. This move comes after Binance and KuCoin received approval, potentially increasing competition and liquidity in India's crypto market.

Offshore Crypto Platforms Seek Entry into India

It has been claimed that two more offshore cryptocurrency exchanges are set to be approved by India's Financial Intelligence Unit (FIU) so they can resume operations in the nation.

The FIU, which is in charge of ensuring that India's Anti-Money Laundering (AML) standards are being followed, is allegedly looking into four international cryptocurrency exchanges that were previously barred for failing to do so.

Foreign Crypto Exchanges Seek Indian Approval

Reportedly, local news media cited an unnamed source as saying, "We have received requests from four more offshore crypto exchanges to operate in India, and we assume that at least two of them will be permitted to resume operations by the end of FY25," following the FIU registration approvals for Binance and KuCoin.

"This would be after undergoing a thorough review of transaction visibility, suspicious transaction reporting, and other related issues," the insider elaborated.

Binance Among Nine Exchanges Banned in January

In the initial week of January, Binance was among nine international cryptocurrency exchanges that were prohibited by India's Financial Intelligence Unit (FIU) for not meeting the country's anti-money-laundering standards.

Two exchanges, KuCoin and Binance, have already registered with the FIU in India. OKX, in contrast, ceased all activities, stating that regulatory burden was the reason.

Binance Addresses FIU Fines and Compliance

After what appears to have been a $2 million fine, Binance filed as a reporting business with the FIU in India on August 15th.

The approval of two more offshore crypto exchanges to begin operations in India will significantly affect India's cryptocurrency ecosystem, according to India Blockchain Alliance founder Raj Kapoor, who spoke to Cointelegraph. Kapoor speculated that this might be a precursor to similar developments in the crypto industry. As a result of more competition in the market, Indian investors should have more trading options and fewer restrictions as a result of the change.

In the future, Kapoor anticipates not only novel items but also reduced fees and improved features. Institutional investors would find the Indian cryptocurrency industry more attractive, he says, because of its increased liquidity. On the other hand, there is a flip side to this. Then Kapoor elaborated:

"Growing competition will undoubtedly put pressure on domestic exchanges to improve their products, potentially leading to regulatory issues as authorities strive to maintain compliance and protect investors in a quickly changing industry."

As the DEA works on a crucial consultation paper regarding cryptocurrency legislation, there may be changes to India's cryptocurrency industry as well.

India Prepares Consultation Paper on Crypto Laws

To help shape the future of digital currencies in India, the government is actively seeking input from a variety of stakeholders in a document that is expected to be released by October.

The COO of the ZebPay cryptocurrency exchange, Raj Karkara, told Cointelegraph that growth- and tech-supportive policies are crucial if India wants to join the ranks of the world's leading crypto markets.

"By seeking inputs from industry experts, companies, and the public, the government is not only fostering transparency but also ensuring that the resulting regulations will be well-rounded and reflective of the needs and aspirations of all the parties involved."

A 30% tax on crypto earnings that have not been realized and a 1% tax withheld at the source for all crypto transactions were instituted in India's cryptocurrency tax regime in April 2022. The Indian government has opted to target crypto-related money laundering and terrorism financing rather than regulate the selling and acquisition of cryptocurrency. ​