In a significant move, the Indian government has blocked access to web platforms for overseas cryptocurrency exchanges, including major players like Binance, Kucoin, and OKX. The decision follows the Financial Intelligence Unit's (FIU) issuance of show cause notices to these entities, seeking clarification on their operations in India.
The FIU, on December 28, expressed concerns about unauthorized operations and non-compliance with anti-money laundering laws. Despite providing a two-week window for response, the deadline lapsed on Friday, January 12. The FIU recommended blocking access to the URL of these platforms, prompting the government's decisive action.
Apple has also taken measures by removing offshore crypto exchanges from its App Store, aligning with the FIU's stance on non-compliance with money laundering laws. Android versions of these apps are expected to face similar actions.
In response to the FIU's notices, Edul Patel, CEO of Mudrex, an Indian Crypto Exchange, stated that proactive steps were taken to guide investors in transferring their funds to compliant platforms. Emphasizing the importance of FIU-compliance, Patel highlighted the legal recourse available to investors against fraudulent activities on their accounts.
Research by Esya Centre, a think tank, reveals that global crypto exchanges cause an annual tax leakage of nearly $25,500,000,000 to the central exchequer due to the absence of registered entities in India.
The move to block access to foreign crypto platforms aims to bolster domestic exchanges, witnessing increased registration activity following government restrictions and renewed interest in digital assets post-ETF approval by the US SEC. The FIU's recent actions are attracting more investors to Indian exchanges, fostering trust in a compliant ecosystem, as stated by Sumit Gupta, co-founder at CoinDCX. Gupta stressed the need for a crucial intervention in taxation and, along with other crypto exchanges, has submitted requests to the government for reconsideration of the 1% TDS, proposing a reduction to 0.01%. Anticipating increased market adoption with this reduction, it signifies a potential positive shift in the regulatory landscape.
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