India's Crypto Crackdown on Offshore Exchange Apps

India’s Crypto Crackdown on Offshore Exchange Apps

Time Stamp: January 10, 2024 11:35 AM
Source Node: 2435761

India has ramped up its regulatory measures against
offshore cryptocurrency exchanges, directing Apple to remove apps from crypto exchanges such as Binance from its App Store within the country.

According to a report by Bloomberg, this recent escalation follows a notice from the
Financial Intelligence Unit (FIU) targeting nine platforms suspected of
regulatory misconduct in late December.

India’s Ministry of Electronics and Information
Technology has prompted the removal of apps of platforms
like Bitfinex, HTX, and Kucoin, among others, from the App Store. While
these directives were not made public, sources familiar with the matter
disclosed this intervention.

India‘s stance against offshore crypto platforms
heightened last December following notifications issued to exchanges suspected
of operating unlawfully. Concerned about the potential loss of access to funds, Indian crypto
traders had already begun shifting deposits to locally compliant exchanges
adhering to the nation’s regulations.

The FIU issued compliance show cause notices to nine offshore exchanges, urging the Ministry of Electronics and Information
Technology to block
their URLs. These notices named Binance, Kucoin,
Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex as entities
operating illegally within India’s crypto landscape, Finance Magnates reported.

Additionally, Asia’s second-most populous country
implemented anti-money laundering provisions within the crypto sector, adding a
1% levy called Tax Deducted at Source (TDS). This step reportedly led to a migration of trading
volumes to offshore venues. Local exchanges were affected as traders sought
platforms that did not impose this tax, significantly reducing their trading
revenues.

Crypto Regulatory Obligations in India

Besides that, the obligation to
comply with India’s anti-money laundering laws applies to the operations of virtual digital assets service providers. These regulations mandate reporting, record-keeping,
and registration, highlighting the significance of abiding by
local laws, even for offshore exchanges.

The stringent regulations in India’s crypto sector have caused some crypto exchanges to reduce their workforce. Following similar moves in the crypto market, India’s crypto exchange CoinDCX opted to lay off 12% of its employees. Alongside challenging macroeconomic conditions, the company attributed a significant portion of its struggles to the TDS regulations imposed by the Indian government.

India has ramped up its regulatory measures against
offshore cryptocurrency exchanges, directing Apple to remove apps from crypto exchanges such as Binance from its App Store within the country.

According to a report by Bloomberg, this recent escalation follows a notice from the
Financial Intelligence Unit (FIU) targeting nine platforms suspected of
regulatory misconduct in late December.

India’s Ministry of Electronics and Information
Technology has prompted the removal of apps of platforms
like Bitfinex, HTX, and Kucoin, among others, from the App Store. While
these directives were not made public, sources familiar with the matter
disclosed this intervention.

India‘s stance against offshore crypto platforms
heightened last December following notifications issued to exchanges suspected
of operating unlawfully. Concerned about the potential loss of access to funds, Indian crypto
traders had already begun shifting deposits to locally compliant exchanges
adhering to the nation’s regulations.

The FIU issued compliance show cause notices to nine offshore exchanges, urging the Ministry of Electronics and Information
Technology to block
their URLs. These notices named Binance, Kucoin,
Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex as entities
operating illegally within India’s crypto landscape, Finance Magnates reported.

Additionally, Asia’s second-most populous country
implemented anti-money laundering provisions within the crypto sector, adding a
1% levy called Tax Deducted at Source (TDS). This step reportedly led to a migration of trading
volumes to offshore venues. Local exchanges were affected as traders sought
platforms that did not impose this tax, significantly reducing their trading
revenues.

Crypto Regulatory Obligations in India

Besides that, the obligation to
comply with India’s anti-money laundering laws applies to the operations of virtual digital assets service providers. These regulations mandate reporting, record-keeping,
and registration, highlighting the significance of abiding by
local laws, even for offshore exchanges.

The stringent regulations in India’s crypto sector have caused some crypto exchanges to reduce their workforce. Following similar moves in the crypto market, India’s crypto exchange CoinDCX opted to lay off 12% of its employees. Alongside challenging macroeconomic conditions, the company attributed a significant portion of its struggles to the TDS regulations imposed by the Indian government.

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