On Saturday, Google removed many cryptocurrency exchanges, including Binance and Kraken, from the Play Store in India. The ban comes two weeks after these global crypto exchanges became “illegal” in this South Asian market.
The Financial Intelligence Unit (FIU), an Indian government agency that scrutinizes financial transactions, issued show cause notices to nine cryptocurrency companies late last month, claiming they were not in compliance with India’s anti-money laundering regulations. Earlier this week, Apple withdrew the apps, and on Thursday evening, various telecom networks and internet service providers began blocking URLs of cryptocurrency exchanges’ websites.
FIU has asked India’s Ministry of Information Technology to block the websites of all nine services in India. Other exchanges whose apps have been blocked include Huobi, Gate.io, Bittrex and Bitfinex. “We are aware of the blocking of IP addresses of a number of cryptocurrency companies, including Binance. This only affects users who are trying to access the Indian iOS app store or the Binance website from India,” Binance said on Saturday before its Android app was removed in the country.
“Existing users who already have the Binance app will not be affected. We remain committed to complying with local regulations and laws and intend to maintain active communication with regulators to ensure that users are protected and a healthy Web3 industry develops.”
Against the backdrop of India’s onerous 30% capital gains tax and 1% transaction fee introduced in 2022, many cryptocurrency traders have migrated to global platforms with less stringent identity verification protocols. This regulatory arbitrage combined with a broader cryptozyme has caused trading activity on WazirX, a popular Indian exchange, to halve in two years.
India’s heavily invested platforms CoinSwitch Kuber and CoinDCX still require strict identity verification. According to fiscal authorities, defected traders appear to have escaped such verification at some international competitors, suggesting classic tax evasion.
“CoinSwitch and CoinSwitch PRO, as well as several other Indian VDA exchanges, are already compliant with Indian Act requirements and there is no reason why offshore exchanges should not do the same if they want to do business in India,” wrote Ashish Singhal, co-founder and CEO of CoinSwitch. “Offshore exchanges should actively consider registering with FIU-IND and comply with India’s anti-money laundering and tax evasion measures. This is also better for consumer protection in India as there will be greater regulatory oversight of the ecosystem.”
India has historically taken a tough stance on cryptocurrencies and the companies that enable their trading. The Reserve Bank of India imposed a ban on cryptocurrencies in the country about five years ago. While that ban was eventually overturned by India’s Supreme Court, the central bank has since continued to advocate for a ban on cryptocurrencies, with its top officials comparing virtual digital assets to a pyramid scheme.
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