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Google pulled several cryptocurrency exchanges, including Binance and Kraken, from India’s Play Store on Saturday, marking the latest blow to the already dwindling web3 dream of the world’s second-largest internet market. The ban comes two weeks after these global cryptocurrency exchanges were reported as operating “illegally” in the South Asian market.
The Financial Intelligence Unit (FIU), an Indian government agency that audits financial transactions, late last month issued show cause notices to nine cryptocurrency companies and alleged that they were not compliant with India’s anti-money laundering rules. Apple pulled the apps earlier this week and various telecommunications networks and ISPs began blocking URLs to cryptocurrency exchange sites on Thursday evening.
The FIU has asked the Indian Ministry of Information Technology to block the websites of all nine services in India. Other exchanges whose apps have been pulled are Huobi, Gate.io, Bittrex, and Bitfinex. “We are aware of an IP ban affecting a number of cryptocurrency companies, including Binance. This only affects users trying to access the Indian iOS app store or,” Binance said earlier on Saturday before pulling its Android app. Binance website from India.
“Existing users who already have the Binance app are not affected. We remain committed to adhering to local regulations and laws, and are committed to maintaining active communication with regulators to ensure user protection and the development of a healthy Web3 industry.
Amid India’s burdensome 30% capital gains tax and 1% transaction tax imposed in 2022, many local cryptocurrency traders have migrated to global platforms with less stringent KYC protocols. This regulatory arbitrage – coupled with the broader cryptocurrency winter – caused a two-year 97% decline in trading activity at WazirX, a popular Indian exchange.
Well-funded Indian exchanges CoinSwitch Kuber and CoinDCX still require strict identity verification. Dissident traders appear to have avoided such scrutiny on some international competitors, demonstrating classic tax evasion behaviour, according to financial authorities.
“CoinSwitch and CoinSwitch PRO, as well as many other Indian VDA exchanges, are already compliant with India’s PMLA requirements for VASPs, and there is no reason why offshore exchanges cannot do the same, if they wish to do business in India.” Ashish Singhal, co-founder and CEO of CoinSwitch, wrote on X earlier this week. “Offshore exchanges should actively consider registering with FIU-IND and complying with India’s AML/CFT measures. This is also better for consumer protection in India as there will be greater regulatory oversight of the ecosystem.”
India has historically taken a tough stance on cryptocurrencies and the companies that enable their trading. The Reserve Bank of India implemented a ban on cryptocurrencies in the country about five years ago. While India’s Supreme Court eventually overturned that ban, the central bank has continued to call for a ban on cryptocurrencies ever since, and its top officials have likened virtual digital assets to a Ponzi scheme.