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India to block crypto exchanges Binance, Kraken websites

Image Credits: Gabby Jones / Bloomberg / Getty Images
Image Credits: Gabby Jones / Bloomberg / Getty Images

India will block crypto exchanges on Binance and Kraken websites. The Indian government agency known as the Financial Intelligence Unit, which is responsible for monitoring financial transactions, announced on Thursday that nine global cryptocurrency exchanges, including Binance, Kraken, Kucoin, and Mexc, are operating “illegally” in the country without complying with the local anti-money laundering act. The Financial Intelligence Unit also requested that the IT Ministry block the websites of these exchanges.

FIU has asserted that it has sent notifications of show cause to each of the nine companies. According to the government agency, global cryptocurrency exchanges can’t circumvent India’s anti-money laundering regulations just because they do not have a physical presence in the country. However, they are expected to comply with these regulations.

Even though they served a sizeable portion of Indian consumers, several offshore firms were not registered and hence did not fall within the purview of the Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework, according to the report.

In March of this year, the framework for combating money laundering and the funding of terrorism in India was expanded to include cryptocurrencies. It was said that 31 cryptocurrency companies had registered with the FIU.

In recent months, many dealers from India have shifted their operations to worldwide cryptocurrency platforms, ostensibly to avoid paying taxes. During the previous year, India started taxing virtual currencies by imposing a thirty percent tax on profits and a one percent deduction on each cryptocurrency transaction.

While many international platforms have not adopted the exact strict know-your-customer verification requirements, cryptocurrency exchanges in India, such as CoinSwitch Kuber, which has a16z’s support, CoinDCX, which has B Capital’s support, and WazirX, which was formerly a partner of Binance, continue to do so. (Over the past two years, the trading volume on WazirX has plunged by an astounding 97%, partly because many traders have shifted their focus to worldwide applications.)

Huobi, Gate.io, Bittrex, Bitstamp, and Bitfinex are more exchanges discovered to violate India’s legal system. A few months ago, Coinbase ceased signing up new customers in India.

Most cryptocurrency exchanges in India are registered with the Financial Intelligence Unit (FIU) and comply with the Prevention of Money Laundering Act. According to Sumit Gupta, co-founder and CEO of CoinDCX, the Financial Intelligence Unit of India’s (FIU IND) recent instruction to offshore Virtual Digital Assets Service Providers (VDA SPs) would help with risk mitigation and result in the creation of a secure VDA ecosystem.

The founder of Binance, Changpeng “CZ” Zhao, stated in an interview with TechCrunch that the company had no interest in extending its operations in India since the South Asian market had not yet established a favorable climate for cryptocurrency.

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