Google bans crypto apps from its Play Store in India. Google has taken down the apps of major global crypto exchanges, such as Binance and Kraken. This action follows a move by the Financial Intelligence Unit (FIU) to issue show cause notices to nine crypto firms for non-compliance with anti-money laundering rules in India. The government’s crackdown is intensifying.
AT A GLANCE
- Google Removes Crypto Apps: Google removed apps of major crypto exchanges like Binance and Kraken from its Play Store in India.
- Government Crackdown: Indian government agency FIU issued notices to nine crypto firms, accusing them of not complying with anti-money laundering rules.
- Apple Follows Suit: Following Google, Apple also pulled crypto apps, and ISPs blocked exchange websites, escalating the regulatory crackdown.
- Exchanges Affected: Binance, Kraken, Huobi, Gate.io, Bittrex, and Bitfinex faced app removals, impacting users attempting access from India.
- Regulatory Arbitrage Impact: Indian traders migrated to global platforms due to domestic tax policies, causing a 97% decline in trading on WazirX.
- Tax Avoidance Concerns: Defecting traders on less stringent international platforms raised concerns of tax avoidance, evading strict identification verification.
- Call for Compliance: Indian platforms like CoinSwitch advocate compliance with PMLA requirements and urge offshore exchanges to register and comply with India’s regulations.
Google Bans Crypto Apps (Binance and Kraken) in India Amid Government’s Crypto Crackdown
In a significant move impacting the cryptocurrency landscape in India, Google has taken action to remove several crypto exchanges, including Binance and Kraken, from its Play Store. This development adds another layer of challenge to India’s aspirations in the web3 space, already facing setbacks.
Regulatory Scrutiny Triggers Ban
The ban follows recent regulatory scrutiny by the Financial Intelligence Unit (FIU), a government agency overseeing financial transactions in India. The FIU issued show cause notices to nine crypto firms, alleging non-compliance with India’s anti-money laundering rules. This move prompted Apple to withdraw the apps earlier this week, and subsequent actions by telecom networks and internet service providers led to the blocking of URLs associated with these exchanges.
Global Exchanges Affected
Among the crypto exchanges affected by Google’s decision are Huobi, Gate.io, Bittrex, and Bitfinex. Binance, in response to the ban, clarified that the impact is limited to users attempting to access the Indian iOS app store or the Binance website from India. Existing users with the Binance app are unaffected, emphasizing the company’s commitment to adhering to local regulations and laws.
Regulatory Arbitrage Amid Taxation Challenges
India’s cryptocurrency landscape has witnessed a shift, with domestic traders seeking refuge on global platforms due to the country’s 30% capital gains tax and 1% transaction levy imposed in 2022. This migration, coupled with a broader crypto downturn, contributed to a staggering 97% decline in trading activity on WazirX, a prominent Indian exchange over the past two years.
Tax Avoidance Behavior and Regulatory Compliance
The regulatory arbitrage facilitated by less stringent know-your-customer protocols on global platforms has raised concerns among fiscal authorities. Defecting traders are suspected of sidestepping rigorous identification verification, exhibiting classic tax avoidance behavior. In contrast, well-funded Indian platforms like CoinSwitch Kuber and CoinDCX continue to enforce stringent identification verification.
Ashish Singhal, CEO of CoinSwitch, urged offshore exchanges to consider registering with the FIU-IND and comply with India’s Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) measures. This, he argued, would not only align with India’s regulatory requirements but also enhance consumer protection through greater oversight.
India’s Historical Stance on Cryptocurrencies
India has a history of adopting a tough stance on cryptocurrencies. While the Reserve Bank of India imposed a cryptocurrency ban five years ago, the Supreme Court later overturned it. However, the central bank continues to advocate for outlawing crypto, with top officials likening virtual digital assets to a Ponzi scheme.
In the wake of these developments, the crypto community awaits further clarity on the regulatory landscape in India, as the government and stakeholders navigate the delicate balance between fostering innovation and ensuring financial stability.
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