Google pulled many crypto exchanges, including Binance and Kraken, from its Play Store in India on Saturday in what is the latest blow to the world’s second largest internet market’s already dwindling web3 dream. The ban comes two weeks after these global crypto exchanges were flagged for operating “illegally” in the South Asian market.
Financial Intelligence Unit (FIU), an Indian government agency that scrutinizes financial transactions, late last month issued show cause notices to nine crypto firms and alleged that they weren’t compliant with India’s anti-money laundering rules. Apple pulled the apps earlier this week and various telecom networks and internet service providers began blocking the URLs of the crypto exchange websites Thursday evening.
FIU had asked India’s IT Ministry to block websites of all the nine services in India. Other exchanges whose apps have been pulled are Huobi, Gate.io, Bittrex, and Bitfinex. “We are aware of an IP block affecting a number of crypto firms, including Binance. This only impacts users who attempt to access the Indian iOS app store or the Binance website from India,” Binance said earlier Saturday before its Android app was pulled.
“Existing users who already have the Binance app are not affected. We remain committed to the adherence of local regulations and laws and we are dedicated to maintaining active communication with regulators to ensure user protection and the development of a healthy Web3 industry.”
Amid India’s burdensome 30% capital gains tax and 1% transaction levy imposed in 2022, numerous domestic cryptocurrency traders have migrated to global platforms with less stringent know-your-customer protocols. This regulatory arbitrage — coupled with a broader crypto winter — caused a 97% two-year decline in trading activity on WazirX, a popular Indian exchange.
Well-funded Indian platforms CoinSwitch Kuber and CoinDCX still demand rigorous identification verification. The defecting traders appear to have sidestepped such scrutiny on certain international competitors, evincing classic tax avoidance behavior, according to fiscal authorities.
“CoinSwitch and CoinSwitch PRO, as well as several other Indian VDA exchanges, are already compliant with India’s PMLA requirements for VASPs, and there is no reason why offshore exchanges shouldn’t do the same, should they wish to do business in India,” Ashish Singhal, co-founder and chief executive of CoinSwitch, wrote on X earlier this week. “Offshore exchanges should actively consider registering with the FIU-IND and comply with India’s AML and CFT measures. This is also better for consumer protection in India since there will be greater regulatory oversight of the ecosystem.”
India has historically taken a tough stance on cryptocurrencies and the companies that enable their trading. The Reserve Bank of India implemented a ban on cryptocurrencies in the country about five years ago. While this ban was eventually struck down by India’s Supreme Court, the central bank has persisted in advocating for outlawing crypto since then and its top officials have likened the virtual digital assets to a Ponzi scheme.