In a major blow to the global cryptocurrency ecosystem, India blocked access to the web platforms of several prominent foreign crypto exchanges, including Binance, Kucoin, and OKX, on Friday. This move, driven by concerns over money laundering, comes amidst a tightening regulatory grip on the digital asset sector in the country.
The action, initiated by the Ministry of Electronics and Information Technology (MeitY), stems from reports and show-cause notices issued by the Financial Intelligence Unit (FIU) regarding potential misuse of these platforms for illegal activities. An official stated that these platforms operated "without the necessary permits and approvals," raising concerns about their compliance with anti-money laundering regulations.
The ban is likely to benefit domestic cryptocurrency exchanges, which have already witnessed a surge in user registrations since the news broke. Industry experts believe this move could significantly impact the Indian crypto landscape.
Officials confirmed that the actions, including the App Store request, were based on reports and show-cause notices issued by the FIU. Additionally, concerns about operating without necessary licenses and approvals, as well as potential money laundering activities, played a role in the decision.
These platforms were operating without the necessary permits and approvals. Finance ministry inputs also pointed to multiple instances of these wallets being used illegitimately and for money laundering," said a MeitY official, emphasizing that further investigations are ongoing.
The FIU had previously (December 28) sent notices to Binance and nine other exchanges, including KuCoin, Huobi, and OKX, seeking clarification on their operations and compliance with anti-money laundering regulations in India. These platforms were given two weeks to respond, but the deadline expired Friday.
According to a report of ET, 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 Centre. 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.