Apple did not immediately provide a response when approached for comment regarding the removal of cryptocurrency exchange apps from its App Store in India.
Binance South Asia X handle pinned a tweet saying:
The Regulatory Dialeimma
In recent periods, a significant number of Indian traders have shifted towards utilizing global cryptocurrency platforms, seemingly as a means to avoid tax obligations. India introduced taxation on virtual currencies last year, imposing a 30% tax on profits and a 1% deduction on each crypto transaction. While several India-based crypto exchanges, such as CoinSwitch Kuber backed by a16z, CoinDCX backed by B Capital, and WazirX previously partnered with Binance, continue to enforce stringent know-your-customer (KYC) verifications for new user onboarding, many global platforms have not adhered to similar practices. Consequently, WazirX has experienced a substantial 97% drop in trading volume over the span of two years, partly due to the migration of traders to global applications.
Ashish Singhal, the co-founder and chief executive of CoinSwitch, highlighted that platforms like CoinSwitch and CoinSwitch PRO, among other Indian Virtual Digital Asset (VDA) exchanges, are already in compliance with India’s Prevention of Money Laundering Act (PMLA) requirements for Virtual Asset Service Providers (VASPs). Singhal emphasized the importance of offshore exchanges following suit and meeting these regulatory standards if they intend to conduct business in India. Singhal stressed that offshore exchanges should consider registering with the Financial Intelligence Unit of India (FIU-IND) and adhering to India’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) measures. This approach, according to Singhal, would not only benefit consumer protection within India but also ensure greater regulatory oversight within the cryptocurrency ecosystem.
CoinDCX and CoinSwitch Kuber, two prominent Indian cryptocurrency exchanges, had previously warned the New Delhi government regarding the potential consequences of its newly imposed taxation policy on cryptocurrencies. They cautioned that such a policy might prompt users to gravitate towards decentralized exchanges or opt for non-compliant services. Recently, CoinDCX made an announcement stating its intention to incentivize customers who transfer their cryptocurrency holdings from global exchanges to their India-based platform through reward programs.
India has historically maintained a stringent stance toward cryptocurrencies and the entities facilitating their trade. Approximately five years ago, the Reserve Bank of India (RBI) imposed a ban on cryptocurrencies within the country. Although this ban was later overturned by India’s Supreme Court, the RBI has continued advocating for the prohibition of crypto assets. Senior officials within the central bank have even likened these virtual digital assets to Ponzi schemes.
Coinbase, a globally recognized cryptocurrency exchange, halted the onboarding of new customers in India last year. Brian Armstrong, the CEO of Coinbase, alleged in 2022 that the company was facing what he termed as “informal pressure” from India’s central bank. This move by Coinbase illustrates the challenges faced by international exchanges in navigating the regulatory landscape in India, highlighting the complexities and pressures involved in operating within the country’s crypto market.