India has taken a decisive step in the crypto regulatory landscape by blocking access to web platforms of overseas crypto exchanges, including Finance, Kucoin, and OKX, as reported by the Economic Times. This move follows non-compliance with show cause notices issued by the Financial Intelligence Unit (FIU).
Show-cause notices were issued earlier this month to Binance and eight other cryptocurrency exchanges by the FIU, citing concerns about unauthorized operations and failure to comply with anti-money laundering laws. The two-week response period lapsed on Friday, January 12, leading to the FIU’s recommendation to block access to the URL of these platforms.
Apple responded swiftly to the FIU’s notice by removing offshore crypto exchanges like Binance, Kucoin, and OKX from its App Store. The National Daily reported that the Android versions of these apps are also likely to face removal.
In response to the FIU’s actions, Edul Patel, CEO of Mudrex, an Indian Crypto Exchange, stated, “We took proactive steps, advising investors to transfer their funds to compliant platforms. Indian investors should aim to have their assets in FIU-compliant entities for legal recourse against any fraudulent activity on their account.”
According to research by the Esya Centre, global crypto exchanges cause an annual tax leakage of nearly Rs 3,000 crore to the central exchequer due to the absence of registered entities in India. Blocking access to foreign crypto platforms is anticipated to benefit domestic exchanges, experiencing increased registration activity following government curbs and renewed interest in digital assets post the US SEC’s ETF approval.
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The FIU’s recent show-cause notices to offshore exchanges are attracting more investors to Indian exchanges, creating a level playing field and fostering trust in a compliant ecosystem, said Sumit Gupta, co-founder at CoinDCX. Gupta emphasized the need for crucial intervention in taxation, urging the government to reconsider the 1% TDS, proposing a reduction to 0.01% for further market adoption.
As India tightens its grip on crypto regulations, the landscape is evolving, with domestic exchanges gaining prominence and investors seeking security and compliance in their digital asset transactions.
