India restricts access to global crypto exchanges, including Binance and Kucoin, after show cause notice
- In Reports
- 04:06 PM, Jan 13, 2024
- Myind Staff
India has taken measures to block access to the online platforms of international cryptocurrency exchanges and virtual digital asset service providers such as Binance, Kucoin, and OKX. This action follows non-compliance with show-cause notices issued by the Financial Intelligence Unit (FIU) to these entities, as reported by the Economic Times.
Following a show-cause notice from the finance ministry's FIU for non-compliance with India's money laundering laws, Apple has removed offshore crypto exchanges like Binance, Kucoin, and OKX from its App Store. The National Daily reports that the Android versions of these apps are also expected to be taken down.
On December 28, the FIU issued notices to Binance and eight other cryptocurrency exchanges, seeking clarification regarding their operations in India. The FIU expressed concerns about their unauthorized operations and non-compliance with laws related to the prevention of money laundering.
The FIU's notice demands a two-week response period for these platforms, which concluded on January 12. Following this, the FIU recommended to the IT ministry to block access to the uniform resource locator (URL) of these platforms, leading to the subsequent government action.
Edul Patel, CEO of Mudrex, an Indian Crypto Exchange, responded to the FIU's show-cause notices to non-compliant crypto exchanges by taking proactive measures. Patel advised investors to transfer their funds to compliant platforms in light of the regulatory concerns raised by the authorities.
"We are ensuring a smooth process for fund transfers from other exchanges, emphasizing the highest safety and compliance standards. Indian investors are encouraged to keep their assets in FIU-compliant entities, providing them with a legal recourse against any potential fraudulent activity on their accounts," he added.
A think tank, Esya Centre, conducted research revealing that global crypto exchanges contribute to an annual tax leakage of nearly Rs 3,000 crore to the central exchequer due to their absence of a registered entity in India.
The blocking of access to foreign crypto platforms is poised to benefit domestic exchanges, which have experienced a surge in registration activity. This trend is attributed to government restrictions and renewed interest in digital assets following the approval of ETFs by the US SEC.
The recent FIU show-cause notice to offshore exchanges is attracting more investors to Indian exchanges, establishing a level playing field. Sumit Gupta, co-founder at CoinDCX, noted that this development not only fosters trust but also signifies a shift towards a compliant ecosystem, providing reassurance to investors.
The official stated "We, along with other crypto exchanges, have submitted requests to the government for a crucial intervention in taxation. We propose a reduction of the 1% TDS to 0.01%, anticipating increased market adoption once this adjustment is implemented."
Image source: Economic Times
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