- Indian authorities go after overseas crypto exchanges.
- The Financial Intelligence Unit claims overseas exchanges are not compliant.
- The crypto community has opted to interpret the crackdown as positive.
India’s relationship with cryptocurrencies has been a tumultuous one. While the Supreme Court of India overturned the Reserve Bank of India’s (RBI) ban on financial institutions dealing with crypto activity in 2020, the Indian government has continued to plot against the industry ever since.
The latest crypto crackdown sees authorities enacting a URL ban on foreign exchanges under the guise of failing to meet money laundering compliance rules. This elicited a cool and measured response from the crypto community, which adopted a glass-half-full attitude.
Crypto Community Responds
Responding to the exchange URL ban from Indian authorities, WazirX founder Nischal Shetty interpreted the move as an attempt to work “towards greater regulatory clarity and control,” harmonizing rules across jurisdictions. Far from taking this as a loss, Shetty stated that this is necessary for India’s crypto landscape to mature.
Echoing Shetty’s sentiment, co-founder of Crypto India, Aditya Singh, said that the move’s intention was likely to encourage foreign exchanges to align with a licensing regime, much like how other jurisdictions operate.
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YouTuber Ivan on Tech adopted a more combative response by encouraging Indian investors to circumvent the restrictions using VPNs and DEXs. However, he still saw the URL ban as ultimately bullish, believing that this would demonstrate that crypto can’t be stopped.
“The elderly people running these governments don't get tech, they think math and cryptography cares about their silly laws they write on papers,” remarked Ivan on Tech.
Despite the defiant stance of the crypto community, Indian authorities maintain that the URL ban is a direct consequence of skirting registration and compliance requirements.
India Implements Exchange URL Ban
On December 28, India’s Financial Intelligence Unit (FIU-IND) issued notices to nine foreign crypto exchanges over their failure to meet registration and compliance requirements. The exchanges affected include major players such as Binance, Kucoin, and Huobi, which all have significant Indian customer bases.
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Per India’s Prevention of Money Laundering Act, 2002, crypto exchanges facilitating cryptocurrency and fiat currencies exchanges or transfer of crypto assets must register with the FIU-IND regardless of whether they have a physical presence in India.
The FIU-IND has also requested that India’s Ministry of Electronics and Information Technology block domestic access to the websites of these non-compliant offshore exchanges. However, the FIU-IND confirmed that 31 crypto exchanges are registered and compliant, meaning users can still trade cryptocurrencies in India.
On the Flipside
- The RBI recently launched a campaign to boost ailing CBDC use by offering incentives such as cashback and rewards points.
- Some view CBDCs and cryptocurrency as philosophically opposed, with the latter conveying freedom and sovereignty.
- India’s Finance Minister Nirmala Sitharaman has a history of opposing cryptocurrencies, including expressing a view of their “destabilizing effects” on the economy.
Why This Matters
By aiming at leading crypto exchanges, India reiterates its drive to limit the influence of cryptocurrency within its borders. Yet the pushback from crypto advocates shows that digital currencies have a life of their own regardless of policy. India now faces difficult questions on how or even whether to control that growing force within a democratic system.
Discover how Indian police manage seized crypto assets here:
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