- OKX notifies Indian users to close accounts.
- India’s FIU issues compliance notices to nine foreign exchanges.
- Indian exchanges are stepping in to fill the gap.
Crypto exchanges are pivotal in the crypto ecosystem, offering liquidity and access to digital assets. However, their operations are increasingly under the microscope as governments and regulatory bodies.
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Most recently, OKX exchange decided to leave India three months after the country’s key regulator issued compliance notices to nine foreign exchanges.
Regulatory Challenges and OKX’s Exit from India
In a notice sent to Indian users on Thursday, March 21, OKX asked users to close their accounts and redeem funds before April 30. The crypto exchange cited local regulatory hurdles as the key reason behind the decision.
This move comes nearly three months after the Financial Intelligence Unit (FIU) of the Indian Ministry of Finance issued compliance notices to nine foreign crypto exchanges. Affected exchanges included Binance, Kraken, Huobi, Bitfines, and OKX. The agency asked authorities to block the websites of the notified crypto exchanges within two weeks of the notice.
After authorities blocked its website and application in January, OKX implemented a new registration process with rigorous Know Your Customer checks. However, the latest notice to users suggests the exchange will no longer operate in India.
Indian Exchanges Flourish After Crackdown
India remains a tricky domain for foreign crypto exchanges to navigate despite being a thriving market due to a lack of clear regulatory guidelines and strict government actions. The government imposes a hefty 30% tax on crypto income with no provision to offset losses. Moreover, traders must pay a 1% tax deducted at source (TDS) on each crypto transaction.
Following the crackdown on foreign exchanges, local exchanges like CoinDCX, WazirX, and BuyUcoin saw a significant opportunity to attract investors. CoinDCX reported a 2000% surge in new inflows, dedicating a $1 million fund to support users transitioning from non-compliant exchanges. Similarly, WazirX and BuyUcoin introduced attractive offers to facilitate and encourage transfers, aiming to capitalize on the regulatory shifts.
On the Flipside
- In June 2022, a typo on India’s Tax Department’s website prompted reports that the 1% tax deducted at source would be lowered to 0.1%. The department later clarified that the tax would remain at its present level.
- Following the notices to crypto exchanges, Apple removed all notified exchanges from India’s App Store.
Why This Matters
India is one of the biggest crypto markets in the world. Moreover, recent developments in the country’s crypto regulatory landscape indicate a global shift towards more stringent regulations.
Read more about the reactions to the India’s crypto crackdown:
India’s Exchange URL Ban Meets Cool Response from Community
Read more about the Ethereum Foundation facing investigation:
Ethereum Foundation Under Investigation By Unknown Authority
