In a sudden move that has left many Indian cryptocurrency traders in a lurch, several leading global cryptocurrency exchange apps have been removed from Apple's App Store in India.
This action comes in the wake of allegations that these platforms were not adhering to the country's stringent anti-money laundering regulations.
The Crackdown on Crypto Exchanges
Government's Show Cause Notice
The Financial Intelligence Unit (FIU) of India, tasked with monitoring financial transactions, has recently targeted nine crypto firms, including industry giants like Binance and Kraken. These firms received show cause notices for allegedly violating India's anti-money laundering laws.
The Disappearance from the App Store
Following the government's scrutiny, apps from eight crypto exchanges, namely Binance, Kraken, Mexc, Kucoin, Huobi, Gate.io, Bittrex, and Bitfinex, have mysteriously vanished from the Apple App Store. Interestingly, Bitstamp remains the sole outlier, still available for download at the time of reporting.
Apple's Silence
Apple has yet to make an official statement regarding the removal of these apps. Meanwhile, the same applications remain accessible through the Google Play Store, and their respective websites are still operational within India.
Tax Evasion and KYC Concerns
The Shift to Global Platforms
Recent tax regulations in India, which include a 30% tax on cryptocurrency gains and a 1% transaction deduction, have prompted Indian traders to flock to global crypto platforms. These platforms are perceived to offer a means of circumventing the new tax rules due to their laxer know-your-customer (KYC) protocols compared to Indian exchanges like CoinSwitch Kuber and CoinDCX.
The Impact on Local Exchanges
Local exchanges, heavily regulated and compliant with KYC norms, have seen a dramatic decline in trading volumes. WazirX, for example, reported a 97% drop over two years, as traders migrated to less stringent international apps.
Responses and Warnings
CoinDCX's Incentivization Strategy
In response to the shifting landscape, CoinDCX has announced a reward program aimed at encouraging users to transfer their crypto assets from global exchanges to its India-based service, hoping to counteract the trend of users seeking more lenient platforms.
Industry Caution
Prior to these developments, Indian cryptocurrency exchanges had warned the government that the new taxation policies might drive users towards decentralized or non-compliant services, a concern that seems to be materializing now.
India's Stance on Cryptocurrency
Historical Resistance
India's relationship with cryptocurrency has been fraught with tension. The Reserve Bank of India (RBI) had previously imposed a ban on crypto, which was later overturned by the Supreme Court. Despite this, the RBI continues to express strong opposition to digital assets, likening them to Ponzi schemes.
Recent Developments
Coinbase, another significant player in the global crypto exchange market, ceased onboarding new Indian users last year. CEO Brian Armstrong suggested that the decision was due to "informal pressure" from the RBI, highlighting the ongoing challenges faced by crypto businesses in India.
Editor's Comments
While the Indian government's commitment to financial regulation is clear, the abrupt removal of crypto apps from the Apple App Store marks a significant escalation in its enforcement actions.
This could be seen as part of a broader strategy to curb the use of non-compliant foreign crypto services, which have become increasingly popular as a means of tax evasion.
The move also underscores the ongoing struggle between innovation in the crypto sector and regulatory efforts to maintain financial oversight and consumer protection.
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