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Indian Government Blocks Access to Major Cryptocurrency Exchanges Over Compliance Concerns

January 16, 2024

Indian Government Blocks Access to Major Cryptocurrency Exchanges Over Compliance Concerns

In a significant move, India blocked access to the websites of top global cryptocurrency exchanges and virtual asset service providers, including Binance, Kucoin, and OKX, on Friday. This action follows the issuance of show-cause notices by the government to these exchanges for non-compliance with the country’s money laundering laws.

The notices, sent on December 28 last year, targeted Binance, Kucoin, Bittrex, Bitstamp, MEXC Global, Houbi, Kraken, gate.io, and Bitfinex, citing illegal operations and failure to adhere to registration and local tax regulations. Consequently, the Ministry of Information Technology was directed to block their URLs.

Edul Patel, CEO of Mudrex, responded to the development, stating that proactive measures were taken to advise investors to transfer funds to compliant platforms. Patel emphasized the importance of having assets in Financial Intelligence Unit (FIU) compliant entities for legal recourse against fraudulent activities.

As reported earlier, the government may consider banning offshore cryptocurrency dealing apps under the Money Laundering Act. The move to block access to foreign platforms is expected to benefit domestic cryptocurrency exchanges, some of which are already experiencing increased registrations.

Industry estimates suggest that around $4 billion worth of crypto assets remain parked in offshore platforms to circumvent the 1% tax deducted at source on virtual digital asset exchanges. Notably, a significant portion, approximately 80%, is held by Binance.

Despite the block, individuals who have already downloaded the apps can still access their wallets, though withdrawals and UPI transfers will not be possible, according to sources familiar with the matter.

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