Indian crypto exchanges are promising hassle-free transfers for users who want to transfer their crypto assets from foreign crypto exchanges after the country’s Ministry of Finance Financial Intelligence Unit banned off-shore crypto exchanges like Binance, OKX and others.
Several Indian crypto exchanges have created lucrative fee waiver deals for users with their funds stuck on banned foreign crypto exchanges. CoinDCX — one of the largest Indian crypto exchanges by trading volume — announced that it had set aside $1 million to help users transfer their assets to complaint crypto exchanges.
An estimated USD 4 Bn is invested in crypto in offfshore exchanges by Indian investors. With the recent regulatory developments, users who have been trading on offshore exchanges are worried about their assets. They want to move to a safe and compliant exchange to continue with their crypto journey. Sumit Gupta, CEO of CoinDCX told Cointelegraph:
'We have witnessed a remarkable 2000% surge in new inflows within the initial week following the issuance of show cause notices to non-compliant entities. In a bid to reinforce trust within the crypto community, CoinDCX has allocated a $1 million fund to assist investors in transferring assets from non-compliant offshore exchanges to the CoinDCX platform. The exchange is actively supporting users through seamless crypto deposits, accompanied by a 1% bonus, and has opened secure deposit routes for a smooth transition."
Later, another Indian crypto exchange, BuyUcoin, announced zero fee transfers for users from off-shore exchanges in light of the FIU ban. Shivam Thakral, CEO of BuyUcoin, told Cointelegraph that they believe FIU’s move is a correct step toward investor protection and enforcing capital flight rules and regulations on foreign exchange entities.
WazirX, another prominent exchange, announced a bonus of 1% to users who transfer their crypto to WazirX. As a result, they have seen a 42.3% increase in P2P transactions, a 253% increase in spot trading volume, and a 114% increase in deposits (crypto + INR) from November to January compared to the previous 3 months. Rajagopal Menon, vice president of WazirX, told Cointelegraph that the recent actions from the FIU were long overdue:
I think it was long overdue. Foreign exchanges were making merry at the expense of Indian exchanges because of regulatory and tax arbitrage. It was a bad situation for everybody: Indian users had no recourse, the government lost tax revenue, and Indian exchanges lost market share.
The FIU, an arm of the Indian Finance Ministry issued a notice of non compliance to Binance, Huobi, Kraken, Gate.io, KuCoin, Bitstamp, MEXC Global, Bittrex and Bitfinex for illegally operating in India on Dec. 28, 2023. The FIU gave a one week window for crypto exchanges to respond to the notice and advised the IT department to block the URLs of mentioned foreign crypto exchanges in case they fail to comply.
On Jan. 10 nearly two weeks after the FIU notice Apple’s Indian app store blocked all foreign crypto exchanges, however, it was still available on the Andiod app store. Within a week, these foreign crypto exchanges were also blocked from Google’s app store. This created a sense of panic among Indian users who had flocked to foreign crypto exchanges like Binance to evade a hafty 30% crypto tax.
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Many Indian crypto influencers discussed alternative ways for users to access the banned platforms in India, including via virtual private networks. However, BuyUcoin advised against it, claiming there are major “negative consequences that could arise from Indian users going for new URLs as they could end up losing all their crypto assets or money due to phishing sites and other online scams.”
OKX has reportedly started asking Indian users to update their personal information to comply with local regulations, indicating a move toward FIU compliance.
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