In a significant move, Google has removed several prominent cryptocurrency exchanges, including Binance and Kraken, from its Play Store in India. The action comes as a follow-up to the Financial Intelligence Unit (FIU) of the Indian government issuing show cause notices to nine crypto firms, alleging non-compliance with India’s anti-money laundering (AML) rules.
The ban was enforced after Apple took similar measures earlier this week, and various internet service providers started blocking URLs of crypto exchange websites.
The FIU had identified these global crypto exchanges as operating “illegally” in the South Asian market, leading to increased regulatory scrutiny. The agency, responsible for scrutinising financial transactions, had requested the Ministry of Information Technology in India to block the websites of all nine services.
Apart from Binance and Kraken, other affected exchanges include Huobi, Gate.io, Bittrex, and Bitfinex. The ban extends to both iOS and Android apps, with telecom networks and internet service providers joining in the restriction of access to these platforms.
Binance, one of the affected exchanges, released a statement earlier on Saturday, stating, “We are aware of an IP block affecting a number of crypto firms, including Binance. This only impacts users who attempt to access the Indian iOS app store or the Binance website from India.”
The company reassured existing users that already have the Finance app installed that they would not be affected and expressed its commitment to adhering to local regulations.
The regulatory crackdown in India comes amidst the imposition of a 30 per cent capital gains tax and a 1 per cent transaction levy in 2022, prompting some domestic cryptocurrency traders to migrate to global platforms with less stringent know-your-customer (KYC) protocols. This trend has contributed to a significant decline in trading activity on Indian exchanges, such as WazirX, experiencing a 97 per cent two-year decline.
Well-funded Indian platforms like CoinSwitch Kuber and CoinDCX, which maintain rigorous identification verification, have been less impacted by the shift. Authorities argue that the migration to international platforms reflects classic tax avoidance behaviour and underscores the need for regulatory oversight in the cryptocurrency ecosystem.
Ashish Singhal, co-founder and chief executive of CoinSwitch, emphasised the importance of compliance with India’s Prevention of Money Laundering Act (PMLA) requirements for virtual asset service providers (VASPs). He urged offshore exchanges to register with the FIU-IND and comply with India’s AML and counter the financing of terrorism (CFT) measures for the sake of consumer protection and greater regulatory oversight.
India has a history of taking a stringent stance on cryptocurrencies, with the Reserve Bank of India implementing a ban on them approximately five years ago. Despite the ban being struck down by India’s Supreme Court, regulatory challenges persist, with officials likening virtual digital assets to a Ponzi scheme. The recent actions against global crypto exchanges highlight the ongoing regulatory uncertainties in one of the world’s largest internet markets.