India’s Action Against Crypto Exchanges

India’s Financial Intelligence Unit has taken steps to block the URLs of nine cryptocurrency exchanges. The move comes as the FIU claims these exchanges are "operating illegally" and not complying with the Prevention of Money Laundering Act.

Details of the Action

The targeted exchanges include Binance, Kraken, Huobi, Kucoin, Bittrex, Gate.io, Bitstamp, Bitfinex, and MEXC Global. This action follows India's recent mandates for crypto firms to collect KYC information and register with the FIU.

Compliance and Registration Requirements

The FIU mandates that any virtual asset service provider operating in India, regardless of their location, must register with the agency as a reporting entity. Despite 31 entities being registered, offshore entities serving Indian users remained unregistered under the AML and CFT framework.

Consequences for Non-Compliance

The FIU has issued "show cause notices" to the nine blocked VASPs. However, beyond URL blocking, the specific repercussions for failing to register remain unclear.

Prime Minister's View on Global Regulation

Prime Minister Narendra Modi emphasised the necessity of a global framework for crypto regulation, stating that regulations should not be confined to one country or a group of countries. He advocates for a global approach to regulating emerging technologies.

India's Stance on Cryptocurrency

India's stance on crypto has been less welcoming, evident from high capital gains taxes imposed on crypto profits. The country maintains a 30% tax on crypto gains, surpassing rates on equities and other investments. Additionally, the central bank governor referred to cryptocurrencies as speculative gambling activities.

Insights on India's Crypto Adoption

Despite regulatory challenges, earlier reports from Chainalysis highlighted India's leading position in grassroots crypto adoption. The country stands as the second-largest crypto market globally by estimated transaction volume.

Challenges and Opportunities Ahead

India's recent actions to block major crypto exchange URLs underscore the regulatory hurdles in the country. While stringent measures aim to ensure compliance, the lack of clarity on consequences may lead to uncertainties within the crypto landscape. Prime Minister Modi's call for global regulation signals a broader perspective on crypto's future. However, India's high tax rates and cautious approach might hinder the sector's growth despite its evident popularity among Indian users.

Insight into India's stance on crypto reflects the global tension between regulation and innovation, highlighting the need for balanced and inclusive regulatory frameworks worldwide.