• Fri. Jul 12th, 2024

India Moves to Restrict Access to International Cryptocurrency Exchanges

Maria Bartiromo

ByMaria Bartiromo

Jan 1, 2024

By announcing plans to restrict access to nine international cryptocurrency exchanges, including  Binance, Huobi, and Kraken, India has taken a significant step forward in its regulatory approach to cryptocurrencies.

The action is said to be in response to claims made by the Financial Intelligence Unit India (FIU IND) that these exchanges are not abiding by Anti-Money Laundering (AML) regulations and are instead, has continued to conduct business unlawfully. The Ministry of Finance’s FIU has expressed concerns regarding these exchanges’ noncompliance with AML regulations, pointing to possible dangers associated with money laundering.

The regulatory environment surrounding cryptocurrency is still being discussed and debated worldwide. Future developments in the cryptocurrency sector are expected to be influenced by the steps made by India and other nations to regulate digital assets.

Indian Government Explains Reason Behind the Decision, Hints on Control 

India’s decision to restrict access to these platforms is consistent with a global trend toward more oversight and control of the cryptocurrency space. The choice to restrict access to these exchanges has been described as a major shift in India’s approach to cryptocurrency regulation.

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Recall that in March  2023, the Indian Ministry of Finance instructed all the cryptocurrency companies operating in the country to get a license from the FIU, which is India’s anti-money laundering authority. It also urged them to abide by the code stipulated by the Prevention of Money Laundering Act (PMLA). 

Indian Government Says Move Part of the Country’s Innovation

The decision by India to restrict access to these exchanges begs additional concerns about the direction that the nation’s cryptocurrency laws may take. The country has introduced a 30% capital profit tax on all profits made from cryptocurrency transactions. The tax has been described to be bigger than the investments in equities.

Shaktikanta Das, the Reserve Bank of India governor, publicly attacked the cryptocurrency industry in a statement, calling cryptocurrency investment a “speculative gambling.” India’s FIU now directly reports to the country’s Economic Intelligence Council (EIC), which the Union finance minister chairs.

The Indian government has since blocked the URL of the nine affected exchanges, mandating them to present it’s Show Cause Notices on (latest) Thursday. The request was also extended to other cryptocurrency firms operating in India and Web 3 advocacy associations.

This information was contained in a letter sent to CoinDesk, and dated December 16, 2023 – and was written by Dilip Chenoy, Chairman, Bharat Web3 Association’s (BWA), and addressed to Sanjay Malhotra, India’s Department of Revenue Secretary, under the Ministry of Finance. 

Prime Minister Modi Intervenes, Suggests a Decentralized Cryptocurrency Framework 

A report from data extracted from Chainalysis’s global cryptocurrency adoption ranking says that India made the list as the second biggest cryptocurrency market in the world in trading volume. The continuous growth attracted the attention of the Indian government to the need to strengthen the regulatory laws.

It was also gathered that the country is developing a cryptocurrency regulatory guide based on the rules of the Financial Stability Board and the International Monetary Fund (IMF). The guide is expected to be launched sometime in 2024 and might also be integrated with the Know Your Customer (KYC) feature and tax policies.

Narendra Modi, India’s Prime Minister, in August 2023, championed the need for a global cryptocurrency regulatory guide. According to the Prime Minister, the proposed regulatory guide for these emerging technologies should be decentralized and not owned by one country.

Maria Bartiromo

Maria Bartiromo

Maria Bartiromo is a renowned news writer and journalist, celebrated for her insightful reporting and authoritative voice. With a career spanning years, she has established herself as a trusted source of accurate and comprehensive news analysis, keeping readers informed on vital global developments.

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