Offshore Crypto Apps Removed from India's App Stores

India's crackdown on offshore cryptocurrency exchanges has escalated, with Apple complying with directives from the Financial Intelligence Unit (FIU) to remove apps of platforms like Binance, Bitfinex, HTX, and Kucoin from its App Store within the country. The FIU's move follows notices issued in December, targeting nine platforms suspected of regulatory misconduct.

Intensifying Measures and Cryptocurrency Shift

India's Ministry of Electronics and Information Technology prompted the removal of these apps, but the directives were not made public. Concerns about potential loss of access to funds prompted Indian crypto traders to shift deposits to locally compliant exchanges. The FIU issued compliance notices to Binance, Kucoin, HTX, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex, naming them entities operating illegally.

Anti-Money Laundering Measures Impact

India implemented anti-money laundering provisions in the crypto sector, including a 1% levy called Tax Deducted at Source (TDS). This move led to a migration of trading volumes to offshore venues as traders sought platforms without this tax. Local exchanges faced reduced trading revenues due to this shift.

Regulatory Obligations for Crypto in India

Apart from tax-related measures, virtual digital assets service providers in India are obligated to comply with anti-money laundering laws. These regulations mandate reporting, record-keeping, and registration. The stringent crypto regulations have caused some exchanges to reduce their workforce, with CoinDCX laying off 12% of its employees. The company attributed its struggles to challenging macroeconomic conditions and the impact of TDS regulations.

Crypto Landscape in India: A Challenging Terrain

India's crypto sector faces increased regulatory scrutiny, impacting both offshore and local exchanges. The FIU's actions reflect a commitment to enforcing compliance, with measures extending beyond app removals to include compliance notices and URL blocking. Traders, responding to regulatory changes, are reshaping the crypto landscape, seeking platforms aligning with India's evolving crypto regulations.

A Regulatory Balancing Act

As India tightens its grip on the crypto sector, a delicate balancing act is evident. While regulatory measures are essential for a secure financial environment, the challenge lies in avoiding stifling innovation. Striking the right balance will be crucial for fostering a thriving cryptocurrency ecosystem in the country.