India Government Bans International Crypto Exchanges
Recent reports revealed that the Indian government has imposed a ban on all foreign cryptocurrency exchanges operating in the region, blocking their websites as well as restricting App stores from enabling citizens to download foreign crypto applications. The country’s authorities cited money laundering concerns as the reason for the prompt ban. Consequently, as Indian investors moved away from offshore platforms, local crypto exchanges reportedly gained more users.
According to the report, the Indian government revealed that due to concerns about money laundering and uncooperative actions towards anti-money laundering regulations, the country has decided to place a ban on offshore crypto exchanges from offering any trading services within its territory henceforth. The imposed veto reportedly took effect on January 12, and it involved barring Indians from accessing the websites that belong to affected exchanges, including prominent ones like Coinbase, Binance, OKX, and KuCoin.
Effects Of The Ban On Foreign Exchanges
In addition, the report revealed a list of activities that the ban has affected. IP blocks activated by the country’s Ministry of Electronics and Information Technology deny Indian investors from gaining access to the URLs of the banned crypto exchanges.
However, some reports revealed that despite the enforced IP blocks, some investors in the region could still use Google Chrome to log in to their accounts on some websites, including Binance, KuCoin, and OKX, without the use of a VPN (Virtual Private Network). Moreover, some users claimed to have accessed Binance’s platform via Mozilla Firefox and Safari browsers.
Additionally, the Indian government reportedly instructed Apple on January 10, 2024, to restrict Indian users from downloading applications belonging to foreign exchanges. Currently, both Android and iOS app stores are restricting Indians from accessing apps belonging to offshore crypto platforms.
Financial Intelligence Unit Raised Some Key Concerns
Furthermore, the Financial Intelligence Unit (FIU) of the Indian Ministry of Finance revealed that some foreign exchanges have been suspected to be involved in breaching the country’s anti-money laundering rules. The FIU stated this after sending show-cause warnings to nine international crypto exchanges operating within the country. The list included Binance, Gate.io, Huobi, KuCoin, Kraken, Bittrex, OKX, Bitifinex, and MEXC Global.
According to the report, the show-cause warnings issued to these exchanges alleged that they were operating illegally in the country and requested them to account for their actions before a specified deadline. Moreover, the authority gave each exchange involved a maximum of two weeks to answer back, which has already elapsed.
In addition, the report stated that even though the ban restricts Indians from downloading affected exchanges’ applications, users who had installed the apps before the ban can still use them. However, it seems users of these firms would have challenges withdrawing their funds because the Unified Payments Interface (UPI) gateways used for withdrawals are no longer active.
Binance’s Response And Effect Of The Ban
Responding to the issue, Binance exchange addressed its Indian users via email concerning the implication of the ban which restricts itself and other foreign exchanges from operating in India. In the email, Binance claimed that it is working earnestly to come up with constructive policymaking that would be beneficial to all market players. It assured its users that their funds were safe while emphasizing its commitment to comply with local rules and regulations of the country.
Meanwhile, statistics showed that the 1% TDS tax policy that India imposed in 2022 drastically reduced the volume of crypto transactions and interactions in the Indian cryptocurrency market as many sought refuge in offshore exchanges to elude taxes. Nonetheless, the latest regulatory measures of the Indian government which ruled out foreign exchanges have gradually changed the narratives as many investors are flocking back to local exchanges.
For example, a prominent local exchange, Wazirx, recorded a 250% rise in deposits shortly after the country issued show-cause warnings to foreign exchanges. Another prominent Indian exchange, CoinDCX also witnessed a significant surge in deposit inflow. Meanwhile, Mudrex exchange reportedly gained about 30,000 new investors on its platform around the same time.
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