In response to the Financial Intelligence Unit’s (FIU) issuance of a notice of noncompliance against 10 foreign crypto exchanges on December 28, 2023, Indian crypto exchanges are now presenting enticing options for investors looking to transfer their crypto assets from banned offshore platforms. The Ministry of Finance Financial Intelligence Unit had imposed a ban on off-shore crypto exchanges such as Binance and OKX.
Several prominent Indian crypto exchanges have introduced appealing fee waiver deals to assist users facing challenges in moving their funds from prohibited foreign crypto exchanges. CoinDCX, a major player in the Indian crypto market based on trading volume, declared that it has allocated $1 million to facilitate the transfer of assets to compliant crypto exchanges.
Approximately USD 4 billion is currently invested by Indian investors in offshore crypto exchanges. In light of the recent regulatory developments and the ban on offshore exchanges, users are expressing concerns about the safety of their assets. They are actively seeking secure and compliant alternatives to sustain their crypto endeavors. Sumit Gupta, CEO of CoinDCX, shared insights on this matter with tronweekly, emphasizing the importance of ensuring a smooth transition for users amid these regulatory changes.
‘We have witnessed a remarkable 2000% surge in new inflows within the initial week following the issuance of show cause notices to non-compliant entities. In a bid to reinforce trust within the crypto community, CoinDCX has allocated a $1 million fund to assist investors in transferring assets from non-compliant offshore exchanges to the CoinDCX platform. The exchange is actively supporting users through seamless crypto deposits, accompanied by a 1% bonus, and has opened secure deposit routes for a smooth transition.”
Subsequently, BuyUcoin, another Indian crypto exchange, disclosed its initiative of facilitating zero-fee transfers for users moving their assets from offshore exchanges following the FIU ban. CEO Shivam Thakral expressed to Tronweekly that they view the FIU’s decision as a positive measure in safeguarding investor interests and upholding regulations governing capital flow in the context of foreign exchange entities.
FIU Acknowledgment: WazirX’s Bonus Spurs Surge In Crypto Activity
In a similar vein, WazirX, a prominent exchange, introduced a 1% bonus for users transferring their crypto holdings to the platform. This move resulted in a noteworthy surge, with a 42.3% increase in peer-to-peer transactions, a substantial 253% rise in spot trading volume, and a remarkable 114% uptick in overall deposits (comprising both crypto and INR) from November to January, compared to the preceding three months. Rajagopal Menon, vice president of WazirX, conveyed to Tronweekly that the recent actions taken by the FIU were overdue and necessary for the market.
“I think it was long overdue. Foreign exchanges were making merry at the expense of Indian exchanges because of regulatory and tax arbitrage. It was a bad situation for everybody: Indian users had no recourse, the government lost tax revenue, and Indian exchanges lost market share.”
The Financial Intelligence Unit (FIU), a division of the Indian Finance Ministry, issued a notice of non-compliance to Binance, Huobi, Kraken, Gate.io, KuCoin, Bitstamp, MEXC Global, Bittrex, and Bitfinex for allegedly conducting illegal operations in India on December 28, 2023. Providing a one-week window for crypto exchanges to respond, the FIU recommended the IT department to block the URLs of the mentioned foreign crypto exchanges in case of non-compliance.
Around two weeks after the FIU notice, on January 10, Apple’s Indian app store took the step of blocking all foreign crypto exchanges, while the Android app store still hosted them. Subsequently, within a week, these foreign crypto exchanges were also barred from Google’s app store. This development caused anxiety among Indian users who had turned to foreign exchanges like Binance to avoid a hefty 30% crypto tax.
Various Indian crypto influencers deliberated alternative methods for users to access the banned platforms in India, including through virtual private networks. However, BuyUcoin cautioned against such approaches, citing potential severe consequences for Indian users, such as the risk of losing their crypto assets or money to phishing sites and other online scams.
In response to the regulatory changes, OKX has reportedly initiated the process of requesting Indian users to update their personal information to align with local regulations, indicating a shift towards compliance with the FIU’s directives.