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How to Access Crypto Exchanges in India Despite the Ban

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In a significant development, India has blocked access to web platforms of overseas crypto exchanges and virtual digital asset service providers, including Finance, Kucoin, and OKX. The move, as reported by Economic Times, is a response to the non-compliance with show cause notices issued by the Financial Intelligence Unit (FIU).

Apple’s App Store Exodus: Offshore Crypto Exchanges Face Scrutiny

Adding to the regulatory wave, Apple recently removed offshore crypto exchanges like Binance, Kucoin, and OKX from its App Store. This action followed a show-cause notice from the finance ministry’s FIU, citing non-compliance with the country’s money laundering laws. The ripple effect is expected to extend to Android versions of these apps, as reported by the National Daily.

Crypto
Crypto

FIU’s Firm Stand: Notices and Concerns Raised

On December 28, the FIU issued notices to Binance and eight other cryptocurrency exchanges, seeking clarification on their operations in India. The FIU raised concerns about unauthorized operations and non-compliance with laws related to the prevention of money laundering.

The notice provided a two-week window for responses, which concluded on Friday, January 12. Subsequently, the FIU recommended to the IT ministry the blocking of the uniform resource locator (URL) of these platforms, leading to the government’s decisive action.

Proactive Measures: A Crypto Exchange’s Response

Edul Patel, CEO of Mudrex, an Indian Crypto Exchange, affirmed their proactive stance in response to the FIU’s show cause notices. Patel stated, “We took proactive steps, advising investors to transfer their funds to compliant platforms.” He emphasized their commitment to providing dedicated support for seamless fund transfers, upholding the highest safety and compliance standards. Patel urged Indian investors to opt for FIU-compliant entities for legal recourse against fraudulent activities.

Tax Leakage Concerns: Global Exchanges and Indian Finances

Esya Centre, a think tank, revealed in its research that global crypto exchanges cause a tax leakage of nearly Rs 3,000 crore annually to the central exchequer. This leakage is attributed to the absence of a registered entity in India for these exchanges.

Boost for Domestic Exchanges: A Shifting Landscape

Blocking access to foreign crypto platforms aims to bolster domestic exchanges, witnessing increased registration activity. Government-imposed restrictions and renewed interest in digital assets post-ETF approval by the US SEC contribute to this surge.

Sumit Gupta, co-founder at CoinDCX, highlights the positive impact on the Indian crypto landscape, stating, “The recent FIU show cause notice to offshore exchanges is attracting more investors to Indian exchanges, creating a level playing field.” This shift not only fosters trust but also signifies a move towards a compliant ecosystem, providing reassurance to investors.

Taxation Woes: Seeking a Crucial Intervention

Gupta, along with other crypto exchanges, expressed concerns about taxation, submitting requests to the government for a reconsideration of the 1 per cent TDS. They propose a reduction to 0.01%, anticipating increased market adoption following this adjustment.

In conclusion, India’s regulatory landscape for crypto exchanges is evolving, with authorities taking decisive steps to ensure compliance and foster a secure environment. The recent actions are not only reshaping the industry but also creating opportunities for domestic players to thrive in a regulated ecosystem.

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