India, a country known for its booming crypto industry, shocked the world on January 12th, 2022, when it announced the blocking of access to global cryptocurrency exchanges such as Binance, KuCoin, and OKX. This move came as part of the Indian government’s efforts to regulate the crypto space and curb potential money laundering activities. However, despite the strict IP block implemented by the Ministry of Electronics and Information Technology, Indians were still able to access these platforms through certain browsers, as of the time of publication.
Although the Indian government aimed to completely restrict access to foreign crypto platforms, a CryptoSlate investigation revealed that individuals could still access Binance, OKX, and KuCoin websites via Google Chrome without VPNs. Surprisingly, the Binance website could also be accessed seamlessly through Safari and Mozilla Firefox browsers, even without a VPN. However, accessing the OKX and KuCoin websites directly remained impossible due to the IP block.
App Store Restrictions on Crypto Exchange Applications
The Ministry of Electronics and Information Technology approached Apple on January 10th, 2022, requesting the restriction of Indians from accessing foreign crypto exchange applications. Following this request, both the iOS and Android app stores swiftly restricted access to these applications for Indian users. This move came after the Finance Ministry’s Financial Intelligence Unit (FIU) issued show-cause notices to nine foreign exchanges, including Binance, KuCoin, and Huobi. The notices alleged that these exchanges were operating unlawfully in India and not complying with anti-money laundering laws.
The Indian government’s clampdown on global crypto exchanges had a significant impact on Indian investors. It aimed to level the playing field by deterring investors from evading taxes through overseas platforms. In 2022, India implemented a 1% tax deduction at source, prompting several investors to move their funds to foreign platforms. However, with the recent restrictions in place, Indian investors have started flocking back to local platforms like WazirX and CoinDCX.
WazirX, once owned by Binance before a bitter split, experienced a staggering 250% increase in deposit inflows within four days of the show-cause notice. Similarly, CoinDCX also witnessed a surge in users since the 28th of December. Local exchanges like Mudrex, backed by Y Combinator, gained an impressive 30,000 new users within the same period.
While Indian investors can still access foreign exchange applications if they had already downloaded them, they may face challenges when it comes to withdrawing their cryptocurrencies. The restrictions on UPI (Unified Payments Interface) withdrawals pose a potential roadblock for those seeking to move their funds from these foreign platforms. This obstacle could hinder liquidity for Indian investors and limit their options for managing their crypto assets.
The Indian government’s crackdown on global crypto exchanges has undoubtedly disrupted the crypto landscape in the country. By blocking access to these platforms, the government has made it increasingly difficult for Indians to trade cryptocurrencies using foreign exchanges. This move aims to encourage the use of local platforms and level the playing field for Indian investors. As a result, local exchanges like WazirX, CoinDCX, and Mudrex are likely to witness a surge in both users and deposit inflows.
In response to the Indian government’s actions, Binance reassured its users that their funds are safe, emphasizing their commitment to comply with local regulations and laws. However, the future of crypto trading in India remains uncertain, as the government continues to implement more stringent regulations to monitor and control the industry.
India’s latest move to block access to global crypto exchanges has disrupted the vibrant crypto ecosystem in the country. Despite partial accessibility through certain browsers, Indian investors will now be compelled to use local platforms for trading cryptocurrencies. This shift is expected to have a significant impact on the local exchanges, which are likely to witness a surge in users and funds. As the Indian government aims to regulate the crypto industry further, only time will tell how these new restrictions will shape the future of crypto trading in India.
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