Regulation
Crypto exchanges Binance and KuCoin secure registration with India’s FIU
- Binance and KuCoin has obtain FIU-IND approval, marking a milestone in Indian crypto regulation.
- KuCoin pays $41,000 penalty as Binance awaits fine determination amid compliance proceedings.
- The return of the exchanges to India signals the growing acceptance of cryptocurrencies in India’s regulatory framework.
In a significant development for the cryptocurrency industry In India, two major exchanges, Binance and KuCoin, have obtained registration approval from India’s Financial Intelligence Unit (FIU-IND), marking a pivotal moment in their journey toward regulatory compliance in the country.
This comes after months of negotiations and challenges following the ban of the two exchanges for alleged illegal operations.
Binance and Kucoin to re-enter India after ban
The path to registration was fraught with obstacles, as both Binance and KuCoin, along with several other offshore entities, faced a ban in December of the previous year for non-compliance with Indian regulations.
The ban, enforced by the Indian Finance Ministry, led to the blocking of URLs and mobile applications associated with these exchanges in January 2024. However, despite these setbacks, Binance and KuCoin emerged as the first offshore crypto-related entities to secure registration with the FIU-IND.
KuCoin took proactive steps by paying a penalty of $41,000, allowing it to resume operations in India swiftly. On the other hand, Binance’s compliance proceedings are still ongoing, with the exact penalty yet to be determined after a hearing with the FIU-IND. Reports suggest that Binance might face a fine of up to $2 million for non-compliance, highlighting the seriousness of regulatory infractions in the Indian crypto market.
Has India’s perception of crypto changed?
The approval of Binance and KuCoin signifies a shift in the perception of crypto exchanges in India and adds credibility to the regulatory framework governing the industry.
Vivek Aggarwal, the head of FIU-IND, emphasized the importance of these registrations in safeguarding the Indian economy against financial crimes. He stated that while the industry awaits parliamentary and governmental legitimacy, registered entities inherently possess a degree of credibility within the system.
India’s position on crypto has been somewhat ambiguous, with the imposition of stiff taxes and periodic crackdowns on offshore exchanges. However, the country’s push for global consensus on crypto regulation within the G20 framework reflects a proactive approach toward addressing regulatory challenges at the international level.
However, despite the challenges, India’s crypto industry continues to evolve, with efforts underway to foster a regulatory environment that balances innovation with financial security. The unveiling of a report titled “Virtual Digital Asset Service Providers: Road to Effective Compliance under PMLA” by the Bharat Web3 Association reflects a commitment to enhancing compliance standards in the crypto sector.
Moreover, the compliance efforts of crypto exchanges with Indian regulations have intensified, with platforms like Kraken, Gemini, and Gate.io initiating negotiations with regulators to address compliance issues. However, some exchanges, such as OKX and Bitstamp, have opted to exit the Indian market altogether in response to regulatory pressures.
This week is all set for some important events for the crypto industry as investors eagerly await the approval of the spot Ethereum ETFs. However, there are some key developments on the regulatory front as well with the US House voting to overturn Biden’s veto on SAB 121.
Will US House Overturn Biden’s SAB 121?
Ahead of this week either on Tuesday or Wednesday, the US House is likely to vote in order to overturn the SAB 121 veto. The SAB 121 has raised major concerns over the past week, especially within the crypto industry.
Many in the crypto market fear that the bulletin could prevent banks from offering crypto custodial services. According to the bulletin, crypto custodial firms must record their customers’ crypto holdings as liabilities on their balance sheets. However, the SEC has defended SAB 121, describing it as “non-binding staff guidance” that enhances disclosures to customers.
In May, the Biden administration decided to veto the decision by lawmakers to repeal the SAB 121 laws. However, the US House could decide to overturn this.
Also Read: Kamala Harris Overtakes Biden In Prediction Markets
All Eyes on CPI and PPI Data
Ahead this week, the US will release the CPI and PPI numbers for the months of June with the Fed chair Jerome Powell likely to deliver his semi-annual monetary policy testimony to the House Financial Services Committee. As of now, there are 50% chances of a 25 basis points rate cut by November this year.
Furthermore, on Wednesday, the Senate Agriculture Committee’s Oversight of Digital Commodities will have a hearing with CFTC Chairman Rostin Behnam. Furthermore, Representative Ro Khanna will have a crypto roundtable with key Democrats and billionaire Mark Cuban to stop Donald Trump’s crusade in crypto.
Also Read: Donald Trump Presidency Can Trigger ‘Global Hash War’
Ro Khanna is currently engaging with top figures from the crypto industry, alongside White House officials and Democratic lawmakers.
Later on Thursday, there’s a Senate hearing for the renomination of SEC Commissioner Caroline Crenshaw and the nomination of Christy Goldsmith Romero, currently a CFTC commissioner, as the new FDIC Chair.
Ahead of the release of the US CPI, the broader crypto market has come under pressure with Bitcoin tanking by 5% on Sunday, and altcoins seeing an even steeper correction.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
The newly elected Indian government under Prime Minister Narendra Modi will present the Union Budget later this month on July 23. India’s crypto industry is looking forward to this budget with high hopes expecting some tax reliefs along the way. Furthermore, the crypto industry is also looking for clear guidelines from the Indian government.
India Budget: Will Govt. Reduce Crypto Tax Burden?
For the upcoming union budget, the crypto industry has a few hopes such as the reduction in crypto taxes, allowing the off-setting of crypto losses against the gains in a given financial year, as well as treating capital gains in crypto at par with other asset classes. Lastly, the industry expects India to build a conducive environment for crypto firms, in order to compete with other global economies.
Back in 2022, the Indian government had imposed a hefty 30% tax flat on crypto gains. This was irrespective of one’s income tax slab. Additionally, the government imposes a 1% tax deducted at source (TDS) on every transfer of crypto assets.
Ashish Singhal, co-founder of cryptocurrency app CoinSwitch, stated that to make the most out of India’s Web3 opportunity, the Indian government must reconsider the cryptocurrency tax treatment in the upcoming budget. He said:
“The flat rate of 30 percent applicable on income from the transfer of VDAs needs to be re-examined to ensure parity with other tech-enabled sectors. Additionally, the threshold of Rs 10,000 or Rs 50,000 can also be looked at. Most crypto sellers (mainly individuals) are in the low-income bracket. Increasing the threshold will reduce the administrative burden on the tax department in processing refunds”.
A key advantage of investing in traditional assets like stocks, gold, and bonds is the ability to offset losses in one asset against gains in another within the same year and to carry forward unadjusted losses for future adjustments. In contrast, losses from one crypto asset cannot be offset against gains from another, nor can they be carried forward. As a result, the industry is seeking a major revision to this rule.
Also read: CoinDCX Acquires BitOasis To Foray Into MENA Region
Furthermore, during the pre-budget consultations, the Bharat Web3 Association requested the government in order to reduce the TDS from 1 percent to 0.01 percent.
“The Indian VDA market has seen a sharp decline in business over the past two years since the 1 percent TDS and capital gains tax were implemented. The 1 percent TDS has significantly impacted our business. We expect the upcoming budget to address our grievances and reduce the TDS and capital gains taxes on VDA transactions to reasonable levels, allowing us a level playing field to function and prosper,” said Shivam Thakral, chief executive officer, BuyUcoin, a cryptocurrency exchange.
Learning Lessons from US Regulations
The US SEC’s approach to regulation through enforcement has faced a strong backlash from the crypto industry players in recent years. Such regulatory measures have forced several token innovators and crypto developers to set up their base outside the US.
One of the primary criticisms of US crypto regulation is the lack of clear, consistent guidelines. This uncertainty has placed startups and established companies in a challenging position, unsure of compliance requirements and wary of abrupt legal repercussions.
As India advances in shaping its crypto regulatory framework, it can draw lessons from the US to sidestep potential pitfalls and cultivate a more favorable environment for digital assets. India should aim for a balanced approach, akin to the Goldilocks zone, promoting innovation while safeguarding investors through regulations that are neither overly stringent nor lax.
Emphasizing the practical utility of blockchain technology beyond speculation can spur the creation of impactful solutions in sectors such as finance, supply chain management, and public administration.
Also Read: Voice of Web3 by Coingape : Showcasing India’s Cryptocurrency Potential
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
A wave of controversy has erupted in the crypto community as Celsius Network faces backlash for suing users who withdrew funds prior to the company’s bankruptcy. David Schwartz, the Chief Technology Officer of Ripple, has weighed in on the matter. Moreover, he offered insights into why Celsius might have taken such drastic action.
Ripple CTO On Celsius’ Latest Move
According to a user on X, Celsius Network has initiated lawsuits against numerous users in New York courts. The user expressed frustration, stating, “Celsius Network has officially sued me and thousands of innocent users… because we happened to take our money off the platform 90 days before they declared bankruptcy.”
The crux of the issue lies in the concept of “clawback.” Clawback provisions allow bankrupt companies to recover funds withdrawn by users within a certain period before the bankruptcy filing. In this case, the period is 90 days. Hence, Ripple CTO Schwartz emphasized the legitimacy of these actions in specific contexts, particularly regarding “non-existent ‘profits.’”
He stated, “If you withdrew fake ‘profits’ that were never actually earned or generated, then you didn’t withdraw your own money.” A user responded to the Ripple CTO, highlighting the perceived injustice. They wrote, “Clawback attempt for people who had withdrawn within 90 days of filing for BK. Absolutely disgraceful behavior.”
Schwartz tried clarifying the nuances by asking, “Are they just trying to clawback non-existent ‘profits’? Or are they trying to clawback returns of principal?” Further discourse revealed that Celsius is allegedly pursuing the return of both profits and principal amounts withdrawn within the 90-day period. The original poster detailed, “They started off asking for 27% of all principal as a settlement, which came across as a giant scam.”
Schwartz’s stance on such actions is clear: “Usually, in schemes like this, they don’t go after people who withdrew their own principal unless there’s evidence that they had inside information or connections.” Moreover, the lawsuit’s impact on users has been severe.
Also Read: XRP Price Decline To $0.40; Can The Ripple’s New Try It Feature Change That?
The Other Perspective
The original poster mentioned, “They are asking for outrageous sums of money, basically my entire net worth.” This sentiment is echoed by many in the crypto community, who fear the broader implications of such legal actions. Another user questioned, “Why would they let you keep profits off assets they are saying you didn’t have the right to have?”
Replying to the user, the Ripple CTO provided a different perspective this time. He argued that the losses suffered by users are a result of Celsius’ fraudulent activities. He stated, “Why should an innocent party bear the costs of Celsius’ fraud? Why should the victim have to suffer the additional loss of bearing the costs of a free option they never agreed to give anyone?”
The lawsuits have not only financial repercussions but also emotional ones. The original poster described the emotional turmoil caused by the lawsuits and the substantial legal fees incurred. “I have to spend thousands to retain an attorney,” they lamented.
As the crypto community watches closely, prominent figures like Coinbase CEO Brian Armstrong and TRON founder Justin Sun have been called upon to support the affected users. In addition, they also asked for aid from ZachXBT, a renowned crypto sleuth. The outcome of these lawsuits could set a significant precedent for the industry.
Also Read: Ripple CLO Slams US Authority Over Crypto Regulation Approach
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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