Sources with knowledge of the matter told a local media outlet that India’s Financial Intelligence Unit (FIU) is reviewing the registration applications of four offshore exchanges. While the names of the platforms were not disclosed, it was stated that two of these exchanges could start their operations by the end of Fiscal Year 2025.

Last year, the FIU sent “show cause” notices to nine foreign cryptocurrency exchanges, including Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global and Bitfinex. The regulator said these platforms failed to meet registration requirements and did not comply with the country’s anti-money laundering rules.

In the process, access to the websites and mobile applications of the affected platforms was blocked in compliance with India’s Prevention of Money Laundering Act. This blocking took place in March 2023 after the Indian Ministry of Finance issued an ordinance requiring cryptocurrency exchanges to register as reporting entities with the FIU.

Pending approval, the two exchanges will undergo a comprehensive review in terms of “transaction transparency, suspicious transaction reporting and other related issues” before resuming operations, according to the source. Additionally, penalties will be imposed depending on the scale of their operations prior to the ban and their degree of non-compliance.

The source said, “We will conduct full due diligence before granting permission to any cryptocurrency exchange to operate in India. “We are very strict about compliance,” he said. KuCoin became the first FIU-compliant foreign exchange after paying a penalty of INR 34.5 lakh (approximately $41,000). However, this penalty was quite modest compared to the $2.25 million penalty that Binance had to pay.

Singapore-based Bitget was also in active talks with FIU. At the time of writing, there were 48 registered crypto organizations in India, including Binance and KuCoin.

Chainalysis has marked India as one of the fastest-growing crypto economies by 2023 and featured it as the country with the highest adoption rate. Therefore, it is no surprise that global crypto exchanges are looking to get back into this fast-growing market. By 2023, the Indian crypto market is estimated to generate over $1 billion in revenue.

However, this process may not be easy as foreign exchanges will also need to register with India’s Goods and Services Tax (GST) regime, which may increase their costs of operation. Binance had to pay $86 million to clear outstanding GST debts on transaction fees charged to Indian customers.