The Indian government continues to crack down on overseas cryptocurrency exchanges. After accusing several foreign exchanges of illegal operations last month, including Binance, Kraken, Gate.io, and Kucoin, the apps of these mainstream cryptocurrency exchanges have now been removed from the Apple App Store in India.
The Financial Intelligence Unit (FIU) of India issued a public announcement at the end of last month, stating that it had issued compliance statements to nine overseas exchanges, including Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. These exchanges were accused of violating India’s anti-money laundering regulations and engaging in illegal operations.
The FIU also sent a letter to the Ministry of Electronics and Information Technology, requesting the blocking of these nine exchanges.
Less than two weeks later, according to TechCrunch, the apps of Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex have been removed from the Apple App Store in India. Only Bitstamp is still operating on the Indian App Store. However, the OKX app, which was not named by Indian authorities last month, has also been removed.
However, these exchange apps are still available on the Google Play Store in India, and users who have already installed the apps on their phones can continue to access them.
Earlier, the US-listed cryptocurrency exchange Coinbase had stopped soliciting new customers in India last year. Coinbase CEO Brian Armstrong had stated in 2022 that Coinbase had to suspend its services in India due to “informal pressure” from the Reserve Bank of India.
Indian traders turn to overseas platforms to avoid taxes. Many Indian traders have recently turned to overseas cryptocurrency exchanges, apparently to evade taxes. Since 2022, the Indian government has imposed a 30% capital gains tax on cryptocurrency trading and requires a 1% Tax Deducted at Source (TDS) and a cryptocurrency gifting tax for every cryptocurrency transaction. TDS requires operators or service providers to withhold the tax amount in advance during transactions and subsequently pay it to the government on behalf of the users. In addition, this tax policy prohibits users from deducting losses and treats cryptocurrencies differently from investment products such as stocks and bonds.
Indian cryptocurrency exchanges such as CoinSwitch Kuber supported by a16z, CoinDCX supported by B Capital, and WazirX, which had collaborated with Binance, have continued to require strict Know Your Customer (KYC) procedures for new users. However, many overseas platforms do not require this, causing WazirX’s trading volume to plummet by 97% within two years, with many users turning to overseas platforms.
CoinDCX and CoinSwitch Kuber have warned the Indian government that its new cryptocurrency tax policy will lead to many users turning to decentralized exchanges or seeking non-compliant services. To attract new users, CoinDCX announced on Tuesday that it will provide incentives for customers who transfer their cryptocurrencies from global exchanges to its platform.