Apple‘s App Store in India has recently delisted ten crypto exchanges, including prominent ones like Binance and KuCoin, following directives from India’s Ministry of Finance due to non-compliance issues. This action is a part of India’s intensifying regulation of the cryptocurrency sector. The Indian Ministry of Finance’s Financial Intelligence Unit (FIU) accused these exchanges of operating illegally in the country and failing to adhere to anti-money laundering regulations.
India’s Crackdown on Crypto Exchanges for Anti-Money Laundering and Tax Adherence
The FIU’s notification to the exchanges occurred on December 28, 2023, and the Ministry of Electronics and Information Technology was requested to enforce the block. The FIU mandates that exchanges operating in India must register as reporting entities and comply with income tax filing requirements. Other affected exchanges include Bitget, Huobi, Gate.io, OKX, Kraken, and MEXC.
This move is seen as an effort to enhance compliance with Indian laws, particularly following the imposition of taxes on digital asset incomes in 2022. Indian law requires a 30% tax on crypto holdings and transfers, along with a 1% tax at source for each trade. The crackdown on offshore exchanges aims to create a level playing field, as India continues to advocate for global collaboration in regulating the crypto sector. While local exchanges in India have been subject to stringent requirements, such as Know Your Customer (KYC) procedures, foreign platforms have operated with less scrutiny.
In response to the decision, Binance South Asia reassured existing users that they would not be affected and expressed a commitment to comply with local regulations. Meanwhile, Apple has removed three offshore crypto exchanges from its App Store in India, and there is speculation that similar actions might follow on Google’s Play Store.
The finance ministry emphasizes that both offshore and onshore Virtual Digital Asset service providers in India must register with the Financial Intelligence Unit-India and comply with the Prevention of Money Laundering Act (PMLA), 2002. This compliance includes maintaining detailed KYC information and records of transactions with clients. The government’s stringent stance on crypto regulations, including heavy taxation and compliance mandates, has significantly impacted the trading volumes and operations of crypto exchanges in India.
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