A report from the Economic Times cites that India has blocked access to the web platforms of overseas crypto exchanges and virtual digital asset service providers, including Finance, Kucoin, and OKX. It comes in the background of show cause notices, which were ignored by these entities’ Financial Intelligence Unit (FIU).
This week, Apple removed offshore crypto exchanges like Binance, Kucoin, and OKX from its App Store after a show-cause notice by the finance ministry’s FIU alleging noncompliance with the laws of money laundering in India. National Daily reported that the versions of these apps in Android are also likely to be pulled down.
On 30th December, the FIU sent notices to Binance and eight other cryptocurrency exchanges seeking clarity from them as far as operations in India are concerned. Concerns were also raised by the FIU about their illegal activeness and disregard for laws regarding money laundering prevention.
The notice from FIU had allowed two weeks to answer these platforms, and this period ended on Friday, January 12. The FIU also advised the IT ministry to block access to these platforms’ uniform resource locator (URL), which led the government bodies into action.
In response to the show cause notices issued by FIU for non-compliant crypto exchanges, we were proactive and advised investors of how they should go about transferring their funds into compliant platforms said Edul Patel, CEO of Mudrex Indian Crypto Exchange.
He added, “We are also focusing on in-dedicated support for smooth asset transfers from other exchanges, ensuring the highest safety and compliance standards. Indian investors need to have their assets in FIU-compliant entities as it opens up a window of legal recourses against any fraudulent activity perpetrated into his or her account.”
Research on global crypto exchanges by Esya Centre, a think tank, has established that tax leakage to the central exchequer is pegged at almost Rs 3000 crore annually because they do not operate through registered entities in India.
The decision to block off access from foreign crypto platforms could help local exchanges that recently have received an increase in their registration activity due to the authorities’ restrictions and renewed attention towards digital cryptos after ETF approval by the US SEC.
There is much cause for notice to offshore exchanges of the recent FIU as more and more investors are switching from Indian exchanges onto such a level playing field. This not only shows that the trust is built but also signals a move toward an environment-compliant ecosystem where investors feel comfortable, said Sumit Gupta, co-founder at CoinDCX.
“This crucial intervention in taxation needs to be made – we, as well as other crypto exchanges, have already approached the government with requests for revision of 1 percent TDS and suggested that it should reduce it to 0.01%,” he concluded.
