Binance, Kraken, Bittrex, Bitstamp, and MEXC blocked in India

abdelaziz Fathi

India’s Financial Intelligence Unit (FIU) has requested the Ministry of Electronics and Information Technology to block the URLs of nine major global crypto exchanges.

This move targets exchanges including Binance, Kraken, Kucoin, Bittrex, Gate.io, Bitstamp, Bitfinex, and MEXC Global, alleging that they are operating illegally in India and failing to comply with the Prevention of Money Laundering Act.

The FIU, responsible for scrutinizing financial transactions, issued warning notices to these firms, adding that global crypto exchanges must adhere to India’s anti-money laundering regulations, regardless of their physical presence in the country.

This action is part of India’s ongoing efforts to bring cryptocurrencies under the ambit of anti-money laundering and counter financing of terrorism frameworks. As of now, 31 crypto firms have registered with the FIU, but several offshore entities catering to Indian users have not complied with these regulations.

The FIU’s decision highlights concerns about the use of global cryptocurrency platforms by Indian traders, many of whom have reportedly switched to these platforms to evade taxes. India has recently implemented stringent tax measures on virtual currencies, including a 30% tax on gains and a 1% deduction on each crypto transaction.

While India-based crypto exchanges like CoinSwitch Kuber, CoinDCX, and WazirX apply rigorous know-your-customer verifications, similar compliance is not always observed by many global platforms. This discrepancy has led to a big shift in trading volumes, with some Indian traders moving to these international apps.

“Most Indian crypto exchanges are FIU registered entities and adhere with the Prevention of Money Laundering Act. FIU IND’s recent directive to offshore Virtual Digital Assets Service Providers (VDA SPs) will help mitigate risks and create a secure VDA ecosystem,” said Sumit Gupta, co-founder and CEO of CoinDCX.

It’s currently unclear what additional ramifications, besides the URL blocking, these companies might face for failing to register with the FIU.

Trading cryptocurrencies in India is not explicitly illegal, and individuals and businesses were actively participating in the crypto market. Regarding taxation, India did impose a tax on cryptocurrency transactions. The tax rate on cryptocurrency gains was subject to the individual’s income tax bracket, which could be as high as 30%. The lack of clear regulations has led to concerns about criminal activities involving cryptocurrencies, prompting calls for regulatory clarity in the country.

Crypto transactions were categorized as capital gains, and taxpayers are required to report their cryptocurrency holdings and transactions for tax purposes. However, cryptocurrencies don’t have the status of legal tender, and they can’t be used for traditional banking activities.

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