The recent Singapore High Court judgment involving Zettai’s restructuring has sparked debate over whether the company must register separately with India’s Financial Intelligence Unit (FIU-IND). However, legal and industry experts indicate that Zettai is not required to do so under current Indian law, reaffirming the legality and compliance of its operational model.

India does NOT currently have a dedicated regulatory or licensing regime for crypto exchanges. Instead, the only formal compliance obligation comes from a March 2023 notification under the Prevention of Money Laundering Act (PMLA), which brings certain Virtual Digital Asset (VDA) service providers within the scope of “reporting entities.” These entities are required to fulfill specific obligations such as:

• conducting Know Your Customer (KYC) checks,
• reporting suspicious transactions, and
• maintaining detailed transaction records.

Importantly, this framework imposes compliance requirements, not licensing mandates.

The FIU-IND, which oversees adherence to these reporting norms, requires registration only from entities involved in INR (Indian Rupee) transactions or onboarding of Indian users. Offshore entities that offer backend crypto services, infrastructure support, or liquidity, without dealing in INR transactions or directly serving Indian users, are not required to register separately with the FIU.

In the context of WazirX, Zanmai Labs is the entity responsible for INR-crypto trading and is registered with the FIU-IND. It manages KYC, compliance, and all reporting requirements. Zettai, by contrast, is a Singapore-based entity that does NOT interface with INR transactions, nor does it onboard Indian users or manage fiat balances. Under Indian law, this distinction means Zettai is not required to register independently with the FIU.

This structural separation is not unique to Zettai. It mirrors industry standards across several major exchanges:

• ZebPay operates via a dual-entity model, where its Indian arm handles INR-related operations and is registered with the FIU, while its crypto operations are managed offshore.
• CoinDCX uses BitGo, a US-based custodian, to secure its crypto assets. Its Indian-facing entity manages compliance and INR onboarding, while crypto custody remains external.
• Binance, which received a show-cause notice from the FIU in late 2023, ultimately registered only one group entity despite multiple operational arms. This move reinforced the principle that only one compliance-facing entity within a larger group typically registers with FIU-IND.

These examples underline a key industry norm: FIU registration is expected only from entities directly interfacing with Indian financial systems. Expecting Zettai, an offshore crypto infrastructure provider, to register separately goes beyond the current legal requirement and industry understanding.

India’s approach to crypto regulation remains narrowly focused on compliance tied to fiat gateways, rather than on blanket regulation of all entities within a group. Legal experts note that extending the registration requirement to offshore or non-INR-facing entities, such as Zettai, would stretch the current legal framework and could wrongly render standard industry operating models non-compliant.

As regulatory clarity continues to evolve, industry stakeholders emphasize the need for consistent, legally grounded expectations. In Zettai’s case, its structure remains aligned with prevailing norms and the compliance-focused approach adopted by Indian authorities thus far.