In a recent move, Google has taken down several crypto apps, including popular ones like Binance and Kraken, from its Play Store in India. This decision comes on the heels of these global crypto apps being flagged for operating ‘illegally’ in the South Asian market.
Background: Show Cause Notices and Accusations
The Financial Intelligence Unit (FIU), responsible for scrutinizing financial transactions, issued show cause notices to nine crypto firms, accusing them of non-compliance with India’s anti-money laundering rules. Apple had already removed these apps, and various networks and ISPs started blocking crypto exchange websites.
The Ban List: Binance, Kraken, Huobi, Gate.io, Bittrex, Bitfinex
Apart from Binance and Kraken, other exchanges facing the app removal include Huobi, Gate.io, Bittrex, and Bitfinex. The FIU has urged the IT Ministry to block the websites of all nine services in India.
Binance’s Response and Impact
Binance, acknowledging an IP block affecting several crypto firms, clarified that this only impacts users attempting to access the Indian iOS app store or the Binance website from India. Existing users with the Binance app are not affected. Binance expressed commitment to adhering to local regulations and laws, emphasizing ongoing communication with regulators.
Changing Landscape: Is This the End of Crypto Days in India?
Many Indian cryptocurrency traders have shifted to global platforms with less stringent KYC protocols, citing India’s 30% capital gains tax and 1% transaction levy imposed in 2022 as a driving factor. Well-funded platforms like CoinSwitch Kuber and CoinDCX demand rigorous identification verification, but defecting traders seem to have sidestepped such checks on certain international platforms, hinting at potential tax avoidance behavior.
Industry Perspective: Compliance and Consumer Protection
CoinSwitch’s CEO, Ashish Singhal, emphasizes compliance with India’s PMLA requirements for VASPs, urging offshore exchanges to do the same for doing business in India. He advocates for registering with FIU-IND and complying with India’s AML and CFT measures, promoting greater regulatory oversight for consumer protection.
Edul Patel, CEO of Mudrex, acknowledges the FIU’s show cause notices to non-compliant crypto exchanges. He highlights proactive steps taken by Mudrex, advising investors to transfer funds to compliant platforms. Patel stresses the importance of having assets in FIU-compliant entities for legal recourse against fraudulent activity.
India’s Cryptocurrency Stance: A Tough History
Since the inception of cryptocurrencies, India has maintained a tough stance against them and companies facilitating their trading. Around five years ago, the Reserve Bank of India implemented a ban on cryptocurrencies.
The Regulatory Quandary
The recent actions by Google and Apple underscore the regulatory challenges surrounding cryptocurrency trading in India. The government’s push for compliance with anti-money laundering rules and tax considerations adds complexity to the landscape.
Conclusion: Navigating the Cryptocurrency Regulatory Maze in India
In conclusion, the removal of crypto apps by Google and Apple in India reflects a dynamic regulatory landscape. The engagement of financial authorities and the shifting behavior of traders suggest a nuanced scenario. The industry’s response to compliance, consumer protection, and legal recourse will likely shape the future of cryptocurrency trading in India. As the landscape evolves, the balance between regulatory oversight and the industry’s innovative potential remains a crucial aspect to watch.
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