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Centre blocks web platforms of offshore crypto apps, including Binance, Kucoin and others
Jan 12, 2024 News Source economictimes_indiatimes 28 hits
India on Friday blocked access to the of foreign cryptocurrency exchanges and virtual digital asset service providers such as , and OKX. The Android versions of these apps are also likely to be taken down as “orders to that effect have been passed already”, a senior government official said. On Wednesday, the Ministry of Electronics and Information Technology’s (MeitY) had asked The action follows inputs from the finance ministry’s Financial Intelligence Unit (FIU), which suggested that these platforms may have been used for money laundering, the official said. Also read | Blocking of access to these foreign platforms is set to help domestic cryptocurrency exchanges, some of which are already witnessing a surge in registrations, industry executives said. “These (offshore) platforms were operating (in India) without the necessary permits and approvals. Finance ministry inputs also pointed to multiple instances of these wallets being used illegitimately and for money laundering,” another official from MeitY said, adding: “Further probe is on.” On Friday, ET reported that the such as Binance if they are found guilty under the Prevention of Money Laundering Act. Government officials had then told ET that the actions on cryptocurrency exchanges, including asking Apple to remove them from the iOS store, had been based on reports and show-cause notices issued to them by the FIU. The and eight other cryptocurrency exchanges asking them to explain their operations in India since they were operating without permissions and were not following the laws required to prevent money laundering. The FIU had also recommended to the IT ministry that access to the uniform resource locator (URL) of these platforms be blocked, which led to the government’s latest action. FIU’s notice had given these platforms two weeks to respond, which lapsed on Friday. It had sent notices to Binance’s Seychelles, Cayman Islands, Switzerland, and Singapore offices. The eight other exchanges from which responses had been sought were Kucoin, Huobi, OKX, Gate.io, Bittrex, Bitstamp, MEXC Global and Bitfinex. These global cryptocurrency exchanges do not have a registered entity in India and are therefore causing a tax leakage of nearly Rs 3,000 crore a year to the central exchequer, according to research by think tank Esya . “There is a lot of confusion among Indian crypto investors who still have assets on website wallets. They have been caught off guard,” Noida-based crypto investor and commentator Vishal Gupta said. According to industry estimates, nearly $4 billion worth of crypto assets are still parked in offshore platforms to circumvent the 1% tax deducted at source applicable on the exchange of virtual digital assets. Nearly 80% of this is held by Binance, people in the know told ET. “Retail traders have still not shifted their holdings to avoid the tax levy. Only a minuscule sum has flown back to India. People who have already downloaded the apps on their phones can still access their wallets, but withdrawals and UPI transfers will not be possible,” a person close to the development told ET. The development is likely to be a blessing in disguise for domestic cryptocurrency exchanges. “Since the issuance of FIU show-cause notice to non-FIU compliant exchanges, CoinDCX has been actively supporting investors who wanted to return to FIU-compliant exchanges. We have opened deposit routes and are diligently working to make this shift easier, prioritizing a safe and flawless experience for users," Sumit Gupta, co-founder of Indian crypto exchange CoinDCX, told ET. The platform recently reported a 2,000% week-on-week increase in registrations due to the transfer of foreign holdings by investors since the FIU notice. To attract more inflows, the company has earmarked $1 million in incentives to be disbursed among investors who wish to make the shift. Stay on top of and that matters. to our daily newsletter for the latest and must-read tech news, delivered straight to your inbox.
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