Industry experts react after India FIU fines Binance $2.2m, signaling tougher digital asset regulations

By Puja Sharma

Binance has been fined $2.2 million by India’s Financial Intelligence Unit (FIU-IND) for anti-money laundering (AML) violations. The fine, imposed as part of FIU-IND’s ongoing efforts to regulate the digital asset market, was conditional upon the approval granted to Binance in May. This move underscores India’s commitment to enforcing stringent compliance measures within the Web3 and virtual digital asset (VDA) sectors.

Dilip Chenoy, Chairman of the Bharat Web3 Association (BWA), emphasized the importance of a robust compliance framework in fostering responsible growth within India’s Web3 industry. He urged all industry participants to adhere strictly to AML and combating the financing of terrorism (CFT) laws. FIU-IND reiterated that under the Prevention of Money Laundering Act (PMLA), VDA Service Providers serving Indian users must comply with regulations regardless of their domicile. This approach is designed to track and trace fraudulent activities effectively.

BWA aims to act as a collaborative platform for industry stakeholders, policymakers, and regulators, ensuring a compliant ecosystem for VDASPs. Chenoy expressed gratitude to FIU-IND for its guidance and collaborative opportunities, reaffirming BWA’s commitment to setting compliance standards to create a safer environment for the Web3 and VDA sectors in India.

Manhar Garegrat, Country Head India & Global Partnerships at Liminal Custody, highlighted the organic progress in regulating the digital assets market in India. He advocated for a common regulatory framework for all stakeholders, which would ensure a level playing field and equal growth opportunities. Garegrat noted that India, with its large, young, and ambitious demographic, along with seasoned investors, is a lucrative market for global brands. Therefore, protecting users’ interests through a regulatory framework is critical. Liminal has been proactive in adapting regulatory policies and recently became the first digital asset custodian to achieve FIU-IND compliance. It also received approval from the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority (FSRA), allowing it to operate as a regulated custodian within the Middle East.

Shivam Thakral, CEO of BuyUcoin, India-based digital asset exchange, remarked that the significant penalty against Binance signals increasing scrutiny and regulation in the digital asset space. He stressed the importance of compliance for user protection and business operations. Thakral believes that sustained efforts by FIU-IND will create fertile ground for Web3 businesses and enable India to become a $1 trillion digital economy. He called for collaboration among Virtual Digital Asset Service Providers (VASPs) in India to foster a growth-oriented ecosystem, advocating for constructive dialogue between regulators and industry players to achieve a mature, pro-consumer digital asset market.