Apple has opted to expel several offshore cryptocurrency exchanges, including notable platforms such as Binance, KuCoin, and OKX, from its App Store in India. This decision comes as a direct response to a show-cause notice issued by India’s finance ministry to nine virtual digital asset (VDA) service providers, levying accusations of operating illegally within the country by failing to adhere to local tax regulations and requisite registration prerequisites. The Financial Intelligence Unit (FIU), operating under the Finance Ministry, issued these notices under the Prevention of Money Laundering Act (PMLA) on December 28, 2023.
The recipients of these notices include Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. The charges levied against them allege operations without proper registration and a perceived disregard for local tax norms. In response to these weighty allegations, the finance ministry, on December 28, mandated the Information Technology ministry to institute the blocking of URLs associated with these exchanges. For its part, tech titan Apple has complied with regulatory directives and taken the measure of removing the applications of the aforementioned exchanges from its App Store in India. This development, while significant, is notably contrasted by the continued availability of these applications on Google’s Play Store.
The tax implications and compliance measures instituted by Indian authorities have precipitated a significant shift in trading volumes, with Indian traders opting for global cryptocurrency platforms to mitigate tax exposure. While Indian exchanges such as CoinSwitch Kuber and CoinDCX uphold rigorous know-your-customer checks, certain global platforms have not instituted commensurate measures.
The predilection of Indian cryptocurrency investors toward offshore exchanges is evident by their desire to circumvent the onerous 30% taxes imposed on income and gains from virtual digital assets (VDAs). Moreover, the imposition of a 1% tax deduction on transactions exceeding ₹10,000 has served as an additional impetus for users to explore offshore platforms. Indian authorities, cognizant of the increasing migration of users to offshore platforms, have actively encouraged these entities to register with the Financial Intelligence Unit-India (FIU-IND) and diligently adhere to anti-money laundering and countering the financing of terrorism (CFT) guidelines. The issuance of show-cause notices is emblematic of the government’s endeavor to induce regulatory compliance and foster transparency within the burgeoning cryptocurrency sector.
In response to the regulatory landscape, CoinDCX, a notable Indian cryptocurrency exchange, has taken the initiative to announce a $1 million Treasury Fund. This fund, operational between January 9 and 18, 2024, offers users a 1% bonus for depositing their virtual digital assets (VDAs) with CoinDCX. Beyond the confines of India, global regulatory scrutiny continues to encircle Binance, the world’s largest cryptocurrency exchange. Presently under investigation in the US for potential violations of anti-money laundering laws, Binance’s regulatory challenges further highlight the intricate interplay between the cryptocurrency industry and governmental oversight.
