Indian Crypto Exchanges Emphasize Compliance Amid Government Crackdown
Top global cryptocurrency exchanges and virtual asset service providers such as Binance, KuCoin, and OKX, are witnessing their endgame in the Indian market. Domestic crypto entities like CoinDCX, KoinBX, WazirX, and CoinSwitch are rising to prominence, strategically emphasizing compliance as a key differentiator in the evolving landscape.
Recently, the Indian Finance Ministry's Financial Intelligence Unit (FIU) issued show-cause notices to nine offshore cryptocurrency exchanges, including major players such as Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global and Bitfinex. Allegations surfaced that these exchanges were operating “illegally without complying with the provisions of the PMLA in India.” This prompted the government to take strict measures against them.
Following the notices, Google and Apple have taken action by removing several crypto exchange apps, including the banned nine, from their respective Play Store and App Store platforms in India. Notably, Binance, a global giant in the crypto space, is displaying a sharp decline in the Indian market.
The Indian government's move is part of a broader initiative to enforce compliance with the country's money laundering laws. To operate in India, “crypto entities are now required to be FIU compliant”, providing users with a legal recourse against fraudulent activities on their accounts.
Still, industry experts believe that the implementation of FIU, which would legitimize the entities in the Indian market, may not completely eliminate all the bad players within the sector.
Platforms like CoinDCX, WazirX, KoinBX, and CoinSwitch are thriving in the Indian crypto space, having successfully undergone the FIU compliance process. Positioned as reliable alternatives, these exchanges address users' needs for legal and hassle-free crypto transactions in the country.
In the past few weeks, cryptocurrency exchanges in India have showcased a surge in volumes with various enticing offers. Notably, KoinBX, India's trusted crypto exchange, has expanded its support to over 126+ trading pairs, and secure crypto transfers from offshore exchanges. This move has increased its appeal, reflecting in a notable trading volume of $9.8 million in the last 24 hours.
Sarvanan Pandian, Founder and CEO of KoinBX, stated:
“Choose to navigate the uncertainties in the Indian crypto landscape with secure and compliant exchanges. At KoinBX, we prioritize users' security and ease, establishing transparent processes amid these tough times. I encourage users to place trust in credible sources and to ignore any FUDs.”
Crypto exchange CoinDCX has entered into a strategic partnership with KoinX, coupled with an investment in the crypto taxation platform. This move will assist CoinDCX in offering users a secure and simplified crypto trading experience. Further, CoinDCX has allocated $1 million to streamline crypto asset transfers for investors from FIU-compliant offshore exchanges with a 1% bonus.
While CoinSwitch announced a 2% cashback for crypto deposits, and WazirX, one of the leading exchanges, declared a 1% bonus for users transferring cryptocurrencies to their platform.
Industry estimates suggest that approximately $4 billion worth of crypto assets are still held on offshore platforms, with nearly 80% of this held by Binance. This trend is believed to be a result of users attempting to circumvent the 1% tax deducted at source applicable to the exchange of virtual digital assets.
As the global crypto landscape experiences a shift in India, local players are seizing the opportunity to provide compliant and user-friendly alternatives, while regulatory actions target non-compliant international exchanges.