- India is taking steps to crack down on overseas cryptocurrency exchanges like Binance.
- Binance, the world’s largest cryptocurrency exchange, has come under increasing pressure from global regulators over the past year.
India steps up crackdown on cryptocurrency trading
India has cracked down on overseas crypto exchanges like Binance, saying they are operating illegally in the country and taking action to block locals from accessing the sites, according to Bloomberg.
India’s Financial Intelligence Unit (FIU) issues so-called compliance justification notices to several exchanges including Binance, Kraken, KuCoin, and Huobi. According to a statement on December 28, the authorities also asked the Information Ministry to block the Web addresses of the nine entities.
The Indian government imposed important rules on the crypto industry this year, joining other countries in tightening regulation of digital assets. A year ago, a tax imposed by authorities on transactions led to a sharp drop in trading volumes, dealing a major blow to local cryptocurrency exchanges. An explanation notice is issued when an individual or entity is suspected of misconduct. This is an official requirement to prove that an individual or entity is complying with Indian law.
The FIU said in its statement that some overseas entities provide services to a large proportion of Indian users but are not registered and subject to the anti-money laundering and anti-terrorist financing framework.
At the previous G20 summit, Indian Prime Minister Narendra Modi spoke in favor of establishing comprehensive global regulation for cryptocurrencies. Modi’s emphasis on embracing technological advances and taking a unified approach signals a possible shift in India’s stance on cryptocurrencies.
Also read: Indian Prime Minister Narendra Modi Advocates Global Cryptocurrency Framework at G20 Summit
The economy is in a dilemma
Local exchanges have complained that the new tax has forced Indian cryptocurrency traders to turn to non-taxed offshore platforms, further hurting their revenues. CoinDCX Chief Executive Sumit Gupta estimated in October that 95 percent of trading volume had moved to overseas exchanges.
Bloomberg reported in 2021 that India’s anti-money laundering agency was looking into whether Binance could play a role in an investigation involving gaming apps. A Binance spokesperson did not immediately respond to a request for comment.
Binance, the world’s largest cryptocurrency exchange, has come under increasing pressure from global regulators over the past year. In November, the company pleaded guilty to anti-money laundering and U.S. sanctions violations and agreed to pay $4.3 billion. Separately, the company’s co-founder and chief executive, Changpeng Zhao, agreed to step down as part of a deal with U.S. authorities.
