Crypto Exchange OKX Suspends Its Services in India Due to Regulatory Issues
Indian regulators are cracking down on the local cryptocurrency sector by introducing stricter regulations. It is reported that OKX exchange became the 9th trading platform to exit the region.
As per the article, the exchange received compliance notices issued by the Financial Intelligence Unit (FIU). FIU is a division of the Finance Minister’s office that issued similar notices to 9 exchanges that have opted to exit.
OKX Asks Clients to Withdraw Funds by April 30
OKX sends a notification to its account holders on 21st March asking them to shut down account and withdraw funds before 30th April. The exchange cited regulatory issues as one of the major reasons for the exit.
In addition, FIU has also sent a request to the Ministry of Electronics and Information Technology to block websites of the exchanges in question within two weeks of receiving the notice.
It is important to note that regulators in India blocked websites and application access to OKX in January. However, at the time the exchange got an extension by implementing KYC checks for registration process. The recent notice of the exchange has made it clear for OKX users in India that the platform has decided to halt its services in India.
Crypto Sector Continues to Struggle in India
India has become a challenging terrain for the local cryptocurrency industry. Foreign exchanges operating in the country are faced with regulatory challenges that have resulted in mass exodus despite the opportune marketplace. Experts have attributed these regulatory changes to lack of clear regulations and strict government scrutiny.
On various occasions, Indian governments have given calls for preparing a regulatory framework during the last 4 years. However, thus far, these efforts are yet to come to fruition. Legislators in India have not taken a keen interest in granting cryptocurrencies a legal status or providing regulatory clarity for the local cryptocurrency markets.
Consequently, there are no clear timelines for Indian cryptocurrency exchanges to have a regulatory framework.
In addition to corporations, cryptocurrency investors in the region are also suffering from stringent regulations. One example is the implementation of a 30% income tax without any offset provisions.
In addition, the cryptocurrency investors hailing from the region also have to account for 1% tax deducted at sources (TDS) on every crypto transaction. These policies have led the established players in the region to opt for new base of operations.
Future of Crypto in India
Speaking with the media, the Finance Ministry of India noted that they cannot treat cryptocurrencies like fiat. The ministry noted that it is one of the main reasons that the government officials have refrained from providing a clear regulatory guidelines or grant legislative clarity for the cryptocurrency sector.
The response of the Indian government on the matter of cryptocurrency regulations is the same as many sovereign jurisdictions. The Cointelegraph noted that the lack of regulatory clarity is not linked directly with the lack of regulatory resources or willingness. The analysts noted that the crypto stakeholders in the region have not made a request to treat cryptocurrencies on the same scale as fiat currencies.
However, legislators and administrators have been asked to regulate the cryptocurrency industry in a similar manner as the traditional stock markets. Custodia Bank a full-reserved Special Purpose Depository Institutions (SPDI) or blockchain bank operating out of Wyoming was recently denied the request to open a Federal Reserve account. Custodia officials noted that they will explore all available avenues.
The neo bank filed for the Federal Reserve account application in October, 2020. On account of the rejection, the SPDI is unable to secure Federal Deposit Insurance Corporation services on account of their association with cryptocurrencies. Custodia took the Kansas City Fed to court in June, 2022 on account of several months of delays regarding the master account decision.
Custodia Bank legal team also presented a document proof in court indicating the Board members’ line edits with names and comments. These edits reversed the initially favorable stance of the Kansas City Fed regarding Custodia’s application.
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