In response to a directive from the Indian government, Apple has removed three offshore cryptocurrency exchanges, namely Binance, Kucoin, and OKX, from its India app store. The move comes after the finance ministry issued show cause notices to nine virtual digital asset (VDA) service providers for non-compliance with anti-money laundering laws.
Attempts by Inc42 to access the apps of the three platforms on the Apple App Store resulted in no availability. The crackdown on these offshore exchanges began around 10 days ago, with notices issued on December 28. Alongside Binance, Kucoin, and OKX, other platforms under scrutiny include Houbi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.
The finance ministry’s show cause notices were a result of these overseas platforms not registering as reporting entities with the Financial Intelligence Unit (FIU). The FIU, in turn, sought intervention from the Ministry of Electronics and Information Technology (MeitY) to block the websites of these entities.
It is mandatory for both onshore and offshore crypto platforms to register with the FIU as ‘reporting entities’ and adhere to the provisions of the Prevention of Money Laundering Act (PMLA), 2002. These regulations necessitate crypto exchanges and VDA platforms to maintain Know Your Customer (KYC) details of users, as well as account files and business correspondence with clients.
Last year, the government brought VDA platforms under the purview of the PMLA. Currently, 31 platforms, including CoinDCX, WazirX, Coinswitch, and Zebpay, have registered with the FIU. The compliance mandates aim to prevent users from turning to offshore crypto platforms to evade the 30% tax on gains from virtual digital assets (VDAs) and the 1% Tax Deducted at Source (TDS) on transactions exceeding INR 10,000.
The stringent taxation measures have led to a decline in trading volume on crypto exchanges, and compliance burdens have prompted local crypto players to alter their course or cease operations. The sector’s challenges, including calls from the Reserve Bank of India (RBI) to ban cryptocurrencies, have further hindered growth, contributing to the collapse of industry giants like FTX and a decline in venture capital funding for the sector.
