On Saturday, Google took a step by removing several cryptocurrency exchanges, such as Binance and Kraken, from the Play Store in India. This action follows the recent classification of these global crypto exchanges as “illegal” in the South Asian market.
Regulatory Crackdown and App Removal
The Financial Intelligence Unit (FIU), an Indian government agency overseeing financial transactions, issued show cause notices last month to nine cryptocurrency companies, alleging non-compliance with Indian anti-money laundering rules. Apple withdrew the apps earlier this week, and subsequent to that, various telecommunication networks and Internet service providers initiated the blocking of URLs associated with cryptocurrency exchange sites.
Call for Website Blocking
The FIU has officially requested the Ministry of Information Technology in India to block the websites of all nine cryptocurrency services. Other exchanges affected by app removal include Huobi, Gate.io, Bittrex, and Bitfinex. Binance, aware of the situation, stated before the removal of its Android app that the IP addresses of cryptocurrency companies, including Binance, were being blocked in India.
Regulatory Challenges and Market Impact
India, known for its stringent stance on cryptocurrencies, has faced challenges, including a 30% capital gains tax and a 1% transaction fee introduced in 2022. These factors, combined with a broader crypto winter, have led many Indian traders to migrate to global platforms with less stringent background checks. This shift has notably impacted WazirX, a popular Indian exchange, witnessing a 50% reduction in trading activity over two years.
Upholding Compliance: A Plea from Indian Platforms
Despite the challenges, Indian high-investment platforms like CoinSwitch Kuber and CoinDCX continue to enforce strict identity verification. However, concerns arise as some international rivals seem to evade such scrutiny, raising issues of potential tax evasion. In response, Ashish Singhal, CEO of CoinSwitch, urges offshore exchanges to register with FIU-IND and adhere to Indian regulations against money laundering and tax evasion for enhanced consumer protection and regulatory oversight.
Historical Stance and Ongoing Debate
India’s history with cryptocurrencies includes a ban introduced by the Reserve Bank of India five years ago, eventually overturned by the Supreme Court, notes NIXsolutions. However, the central bank remains vocal in advocating for a cryptocurrency ban, comparing virtual digital assets to a pyramid scheme.
This recent development amplifies the ongoing debate on the regulatory landscape of cryptocurrencies in India, impacting both local and global players in the crypto industry.