In a bold move, Apple has expelled offshore crypto exchanges, including major players like Binance, Kucoin, and OKX, from its App Store. This decision comes in the wake of a show-cause notice issued by the finance ministry to nine virtual digital asset (VDA) service providers. These entities, namely Binance, Kucoin, Houbi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex, were accused of operating illegally in India by flouting registration and local tax regulations.
The finance ministry, on December 28, initiated the show-cause notice, prompting the information technology ministry to block their URLs. Notably, Apple has refrained from providing immediate comments on this development, while the apps in question remain accessible on Google’s Play Store at the time of this article’s publication.
Offshore Exchanges Face Legal Scrutiny in India
The non-registration of offshore exchanges in India first came to light when the Lok Sabha raised concerns in early December. Subsequently, the finance ministry disclosed a list of 28 crypto and VDA service platforms registered with the Financial Intelligence Unit-India (FIU-IND), adhering to anti-money laundering and countering the financing of terrorism (CFT) guidelines under the Prevention of Money Laundering Act (PMLA).
Responding to this, offshore platforms such as Binance and Coinbase were urged to register to ensure continued operations in the country. The finance ministry escalated matters by issuing show-cause notices on December 28.
Evading Taxes: A Motivation for Offshore Crypto Investments
Indian crypto investors have increasingly turned to offshore exchanges in an attempt to avoid the hefty 30 percent taxes on income and gains from virtual digital assets (VDAs). Additionally, a 1 percent TDS on transactions exceeding Rs 10,000 has contributed to this surge. CoinDCX co-founder Sumit Gupta revealed that more than 90 percent of crypto traffic from India in recent years found its way to offshore exchanges.
CoinDCX Lures Users with a $1-Million Treasury Fund
Responding to the upheaval, CoinDCX co-founder Sumit Gupta announced a $1-million Treasury Fund. The fund aims to attract users by offering a 1 percent bonus on VDA deposits made between January 9 and 18, 2024. This strategic move seeks to capitalize on the influx of users from offshore platforms.
“In urging offshore exchanges to register with the FIU-IND, the goal is to bolster compliance with Indian laws, covering taxation, the PMLA, and KYC norms,” emphasized Ashish Singhal, Co-founder and Group CEO of PeepalCo & CoinSwitch. Singhal believes this approach will level the playing field between Indian and offshore exchanges, strengthen compliance measures, and enhance consumer protection.
As Apple takes a decisive stand and India tightens regulatory screws, the crypto landscape undergoes significant shifts, leaving investors and platforms alike to adapt to the evolving regulatory environment.
