India blocked access to global crypto exchanges including Binance, KuCoin and OKX on January 12. India has instituted an IP block that prevents Indians from accessing URLs of foreign crypto platforms.
However, according to CryptoSlate’s investigation, it was still possible to access Binance, OKX, and KuCoin websites through Google Chrome without using a virtual private network (VPN), at the time of publication. The Binance website was also accessible via Safari and Mozilla Firefox browsers without any VPN, although the OKX and Kucoin websites were inaccessible.
On January 10, the Ministry of Electronics and Information Technology asked Apple to block Indians from accessing foreign exchange apps. At the time of writing, the iOS and Android app stores have restricted access to foreign cryptocurrency exchange apps to Indians.
The move comes after the Finance Ministry’s Financial Intelligence Unit (FIU) warned that some international exchanges may have been targeted for money laundering, a government official said. said economic times.
Foreign exchange repression
The FIU’s warning came about two weeks after it issued show cause notices to nine foreign exchanges operating in India. This included Binance, KuCoin, Huobi, OKX, Kraken, Gate.io, MEXC Global, Bitfinex and Bittrex.
The show cause notice alleged that the exchanges were operating illegally in India and did not comply with anti-money laundering laws. A show cause notice is a formal document that alleges wrongdoing and asks companies to explain why disciplinary action should not be taken against them.
The show cause notice gave the exchanges two weeks to explain, which expired on Friday.
The recently imposed restrictions will prevent Indians from downloading the forex app. However, those who have already downloaded the apps can still access them. Withdrawing cryptocurrencies could, however, prove problematic as UPI withdrawals will no longer be available.
In an email to users, Binance said:
“We work hard to engage in constructive policymaking that seeks to benefit every user and market participant. All user funds are safe.”
Binance added that it remains “committed to complying with local regulations and laws.”
Indian stock markets are thriving
Indian stock exchanges have seen a hemorrhage of users to foreign platforms after India implemented a 1% withholding tax in 2022. Several investors have turned to foreign platforms to avoid the taxes.
The recent crackdown is expected to level the playing field, however, as Indian investors have already started flocking to local platforms. WazirX, for example, saw deposit flows increase by 250% in the four days after the show cause notice was issued compared to the previous four days, Bloomberg reported. WazirX was owned by Binance until an unceremonious and bitter split in 2022.
WazirX’s rival CoinDCX has also gained users since December 28. Mudrex, a local exchange backed by a Y combinator, has gained 30,000 new users since December 28, according to the Bloomberg report.
With foreign platforms becoming almost impossible to access, Indians wishing to trade cryptocurrencies will have no choice but to use local platforms, which are expected to see more influx of users and deposits.