Google pulled several crypto exchanges, including Binance and Kraken, from its Play Store in India on Saturday, in what is the latest blow to the web3 dream of the world’s second-largest internet market, which is already shrinking. The ban comes two weeks after these global crypto exchanges were flagged for “illegal operation” in the South Asian market.
The Financial Intelligence Unit (FIU), an Indian government agency that oversees financial transactions, late last month issued notices to nine crypto firms and claimed they were not complying with India’s anti-money laundering rules. Apple pulled the apps earlier this week, and various telecommunications networks and ISPs began blocking the URLs of crypto exchange websites on Thursday afternoon.
FIU had asked India’s IT ministry to block the websites of all the nine agencies in India. Other exchanges whose apps have been pulled include Huobi, Gate.io, Bittrex and Bitfinex. “We know that an IP block affects a number of crypto companies, including Binance. This only affects users trying to access the Indian iOS app store or the Binance website from India,” Binance said earlier Saturday before its Android app was pulled.
“Existing users who already have the Binance app are not affected. We remain committed to complying with local regulations and laws and are committed to maintaining active communication with regulatory authorities to ensure user protection and the development of a healthy Web3 industry.”
Amidst India’s burdensome 30% capital gains tax and 1% transaction levy imposed in 2022, many domestic cryptocurrency traders have migrated to global platforms with less stringent know-your-customer protocols. This regulatory arbitrage—combined with a broader crypto winter—caused a 97% two-year drop in trading activity on WazirX, a popular Indian exchange.
Well-funded Indian platforms CoinSwitch Kuber and CoinDCX still require strict identity verification. Departing traders appear to have bypassed this control at some international competitors, demonstrating classic tax avoidance behaviour, according to fiscal 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 should not do the same if they wish to operate 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 comply with India’s anti-exploitation and anti-destruction 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 hard line on cryptocurrencies and the companies that allow them to be traded. The Reserve Bank of India implemented a ban on cryptocurrencies in the country about five years ago. While that ban was eventually overturned by India’s Supreme Court, the central bank has persisted in upholding the illegal crypto ban ever since, and its top officials have likened the virtual digital assets to a Ponzi scheme.
