How to maintain standards in the virtual digital assets space

Author: Sumit Gupta

The cryptocurrency ecosystem in India is undeniably experiencing growth, but what really sets this expansion apart is not just the increase in the number of exchanges or investors, or the volume of transactions. Rather, it is the significant shift towards compliance and regulatory oversight that is changing the landscape.

The recent approval by India’s Financial Intelligence Unit (FIU) to register foreign cryptocurrency exchanges Binance and Kucoin as Virtual Asset Service Providers (VASPs) marks a key moment in India’s crypto journey. The move not only expands the options available to Indian investors but also marks a new era of regulatory compliance in the cryptocurrency industry.

Amid questions from the community and media regarding the implications of foreign exchanges entering the market, it is important to understand that leading stock exchanges in India view this development as a positive. The entry of more exchanges into the Indian market is not seen as a threat, but rather as a welcome opportunity for growth and innovation. This means the market is maturing. While users now have a wider range of options, investors are advised to choose an exchange that ensures long-term exposure to the industry.

Here are five key points that investors need to consider when choosing a cryptocurrency exchange: FIU-IND compliance and registration: : Make sure the exchange is registered with FIU-IND and complies with Indian regulations, including PMLA guidelines, to avoid the risk of government blockades and ensure the safety of your funds. Security: : Beware of fake websites imitating popular exchanges. Verify the URL before creating an account or investing to avoid being exploited by fake platforms. Transparency: : Choose exchanges that publish proof of reserves and commitments and provide clear explanations of how they select new tokens. Choose platforms with at least five years of experience. Liquidity: : Choose exchanges with high trading volumes and popular trading pairs to ensure smooth trading, fast buying/selling and minimal slippage. Fees and customer service: : Familiarize yourself with the exchange’s fee structure and prioritize those that provide solid customer service. To ensure a better experience, look for platforms that actively engage with users through channels like Telegram and Discord.

The Indian cryptocurrency market is one of the largest in the world, and the emergence of cryptocurrencies as a popular asset class is undeniable. With the country already at the forefront of global cryptocurrency adoption, there is enormous potential for further expansion and development.

Indians now have access to exchanges that are fully compliant with regulatory standards, both at home and abroad. This ensures a level playing field for all participants and fosters trust in the crypto ecosystem.

One of the key benefits of registering an FIU for stock exchanges is the reduction of illegal activities. Non-compliant exchanges are often breeding grounds for illegal activities, including tax evasion and P2P fraud. Thanks to FIU’s oversight, law enforcement now has the tools to effectively monitor and regulate cryptocurrency platforms, thereby improving the industry’s reputation and strengthening trust among users.

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Moreover, compliance measures such as KYC checks and limited withdrawals, which were previously viewed with skepticism, are now gaining recognition from users. They understand that these measures are necessary to protect their interests and ensure a safe trading environment.

Increased visibility of crypto transactions by FIUs will further enhance transparency and monitoring efforts. By submitting suspicious transaction reports (STRs) and cracking down on illicit activities, authorities can maintain the integrity of the cryptocurrency market and protect investor interests. It is important to remember that compliance is not just a legal requirement, but a fundamental aspect of building a robust and sustainable crypto ecosystem.

However, while FIU registration is a positive step towards regulatory clarity, challenges remain. The imposition of tax deducted at source (TDS) has impacted trading volumes across all stock exchanges in India, leading to a shift to offshore platforms. P2P transactions, while popular, pose risks to customer funds and highlight the need for more stringent regulatory oversight.

A collaborative approach involving policymakers, industry stakeholders and regulators is essential to meet the evolving needs of the Indian crypto industry and support sustainable development.

The FIU registration of offshore exchanges marks a significant milestone in India’s crypto journey. By taking regulatory compliance and oversight into account, we can build a more secure, transparent and resilient crypto ecosystem that supports trust and innovation.

(The author is co-founder of CoinDCX)

Reservation: The opinions, beliefs and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs and views of ABP Network Pvt. Ltd. Crypto products and NFTs are unregulated and can be very risky. There may be no legal recourse for any losses arising from such transactions. Cryptocurrency is not legal tender and is subject to market risk. Readers are advised to seek expert advice and carefully read the offering documents and related important literature on this subject before making any investment. Forecasts regarding the cryptocurrency market are speculative in nature, and any investments will be made at the sole expense and risk of readers.