India blocks access to overseas crypto exchanges Binance, Kucoin, and more after show cause notice
On December 28, the FIU issued notices to Binance and eight other cryptocurrency exchanges, seeking clarification from them over operations in India.
India has stopped people from using websites of foreign crypto trading and digital money services like Finance, Kucoin and OKX. This decision was made because these companies did not follow the rules given by the Financial Intelligence Unit (FIU), even after receiving warnings.
Apple has removed offshore crypto exchanges such as Binance, Kucoin and OKX from its App Store after a show-cause notice by the finance ministry’s FIU for not complying with India’s money laundering laws. The FIU issued similar notices to Binance and eight other crypto exchanges highlighting concerns over unauthorized operations and non-compliance with laws related to the prevention of money laundering. FIU’s notice gave a two-week period, which lapsed on January 12, for these platforms to respond to the concerns raised. The FIU has also recommended to the IT ministry that access to the URL of these platforms be blocked. The Android versions of these apps are also expected to be taken down, according to media reports.
The CEO of Indian crypto exchange Mudrex, Edul Patel, has made a statement in response to show cause notices sent by India’s Financial Intelligence Unit (FIU) to non-compliant crypto exchanges. Patel explained that Mudrex has been proactive in advising investors to transfer their funds to compliant platforms and is providing dedicated support to ensure safe and seamless transfers. Patel stressed the importance of investing in FIU-compliant entities for legal recourse in the event of fraudulent activity on an investor’s account. The Indian government is cracking down on non-compliant crypto exchanges to prevent tax evasion and ensure the safety of investors. Research by think tank Esya Centre suggests that global crypto exchanges cause tax leakage of nearly Rs 3,000 crore ($429 million) per year to the Indian central exchequer due to their lack of registered entities in India.
Scenarios in which Deferred Tax is Recorded?
As governments move towards tighter regulations, the Indian authorities have been blocking access to foreign crypto platforms. This move has been received incredibly well domestically and has contributed to the rise in registration activity for Indian exchanges. With renewed interest in digital assets following ETF approval by the US SEC, it seems the Indian government is capitalizing on this surge in demand.
Moreover, the recent FIU notice to offshore exchanges enhances trust and creates a level playing field for investors. This level of compliance is a step in the right direction for fostering investor confidence. Co-founder of CoinDCX, Sumit Gupta, believes that while this intervention is a significant step towards creating a secure ecosystem, more critical intervention is required in taxation.
Gupta and other crypto exchanges have submitted a request to the government to reconsider a 1% TDS on crypto transactions, suggesting a reduction to 0.01%. If accepted, this proposed reduction would result in an anticipated adoption boost in the market. The Indian crypto market is headed towards regulatory changes and an ecosystem that works for investors.
Related Articles
