The Android versions of these apps are also likely to be removed because “orders to that effect have already been passed,” a senior government official said. On Wednesday, the Ministry of Electronics and Information Technology (MeitY) had asked Apple to remove offshore cryptocurrency apps from its store.
Improve your tech prowess with high-value skills courses
| Offering university | Course | Website |
|---|---|---|
| Indian Business School | ISB Professional Certificate in Product Management | Visit |
| IIM Kozhikode | IIMK Advanced Data Science for Managers | Visit |
| Northwestern University | Kellogg Graduate Certificate in Product Management | Visit |
The action follows inputs from the Financial Intelligence Unit (FIU) of the Ministry of Finance, which suggested that these platforms may have been used for money laundering, the official said.
Also read | Ban threat looms over offshore crypto platforms as government steps in
Blocking access to these foreign platforms will help domestic cryptocurrency exchanges, some of which are already seeing a surge in registrations, industry executives said.
Discover the stories of your interest
On Friday, ET had reported the Center could ban offshore cryptocurrency trading apps such as Binance if they are found guilty under the Money Laundering Act.
More research on
Government officials then told ET that actions on cryptocurrency exchanges, including asking Apple to remove them from the iOS store, had been based on reports and show cause notices issued by the FIU.
“These (offshore) platforms were operating (in India) without the necessary permits and approvals. The inputs from the Ministry of Finance also pointed out multiple cases of illegitimate use of these wallets and for money laundering,” another MeitY official said, adding: “Further investigations are underway.”
He The FIU had issued notices to Binance on December 28 and eight other cryptocurrency exchanges asking them to explain their operations in India as they operated without permits and did not follow required laws to prevent money laundering.
The FIU also recommended to the IT Ministry that access to the uniform resource locator (URL) of these platforms be blocked, leading to the government's latest action.
The FIU's notice had given these platforms two weeks to respond, which expired on Friday. It had sent notices to Binance offices in Seychelles, Cayman Islands, Switzerland and Singapore. The other eight exchanges from which responses were requested were Kucoin, Huobi, OKX, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.
These global cryptocurrency exchanges do not have a registered entity in India and are therefore causing a tax leakage of nearly Rs 3,000 crore a year to the central exchequer, according to research by think tank Esya Centre.
“There is a lot of confusion among Indian crypto investors who still have assets in website wallets. They have been caught off guard,” said Vishal Gupta, a Noida-based crypto investor and commentator.
According to industry estimates, nearly $4 billion worth of crypto assets are still parked on offshore platforms to avoid the 1% tax deducted at source applicable to the exchange of virtual digital assets. Nearly 80% of this is in the hands of Binance, people in the know told ET.
“Retail traders have not yet transferred their holdings to avoid the tax. Only a minuscule sum has returned to India. People who have already downloaded the apps on their phones can still access their wallets, but UPI withdrawals and transfers will not be possible,” a person close to the development told ET.
This development is likely to be a blessing in disguise for domestic cryptocurrency exchanges.
“Since the issuance of the UIF show cause notice to exchanges that are not compliant with the UIF requirements, CoinDCX has been actively supporting investors who wanted to return to exchanges that are compliant with the UIF requirements. We have opened deposit routes and are working diligently to facilitate this change, prioritizing a secure and seamless experience for users,” Sumit Gupta, co-founder of Indian crypto exchange CoinDCX, told ET.
The platform recently reported a 2,000% weekly increase in registrations due to the transfer of foreign holdings by investors since the FIU notice. To attract more inflows, the company has earmarked $1 million in incentives to be disbursed to investors willing to make the switch.
