Binance, KuCoin Request Source of Funds from Indian Users After FIU Registration

• Crypto exchanges Binance and KuCoin allegedly demand users’ personal information to facilitate transactions. 
• The observations were made by users of the platforms not long after both exchanges completed registration with India’s FIU. 
• Simple transaction errors made by users might also be flagged going forward. 

Following Binance’s registration with India’s Financial Intelligence Unit (FIU), Indian-based cryptocurrency users have made claims that Binance now demands more information for users to carry out deposits and withdrawals on its platform. Market players have also highlighted the potential impact of the exchange’s most recent regulatory move. 

As observed by Pushpendra Singh, a popular Indian crypto tech personality, cryptocurrency exchanges Binance and KuCoin have begun requesting sources of funds from their respective users. A screenshot Singh shared on X shows that users of both exchanges must now justify the source of their payments after each deposit. This includes providing the depositor’s PAN card, as required by the FIU. For larger crypto deposits, users must also provide their name, company, and Aadhaar number.

Withdrawals Remain Unchanged

Like many other crypto exchanges, withdrawals require only an OTP from customers. However, as a result of FIU compliance, users are expected to submit more personal information that can also be acquired by government departments. 

Neither Binance nor KuCoin has confirmed or denied these claims. However, on October 6th, a crypto research platform posted screenshots supporting user experiences.

The exchange is aligning with the FIU and its anti-tax evasion guidelines. However, users of both exchanges might risk being flagged for simple transaction errors.

Binance and KuCoin reintegrated into India’s crypto market 

Binance and KuCoin obtained registration from the Indian FIU this year to operate as Virtual Asset Service Providers (VASPs) in India.

Vivek Aggarwal, the director of FIU-IND, disclosed that KuCoin made a Rs 35.5 lakh penalty fee for a previous compliance breach. On the other hand, Binance’s lapses are still being investigated. 

Read also : No More Blanket Account Freezes in India’s Crypto Fraud Cases

“We are now having a full visibility of transactions that we need and the STR (suspicious transaction report) submission process will start soon.” Aggarwal said. 

While offshore entities must work with a principal compliance officer for transparency, the FIU does not require them to register separate businesses in India.

Recall that back in January, In January, nine cryptocurrency exchanges, including Binance and KuCoin, were suspended from providing web and mobile app-related crypto services in India. The government cited their failure to comply with FIU and Anti-Money Laundering (AML) policies.