In another tyrannical move towards crypto, India's finance ministry by the recommendation of FIU has issued show cause notices to 9 major Cryptocurrency exchanges. This move may be a killing blow for the crypto market in the world's largest country as it may lead to banning URls for these exchanges if found uncomplying to the Anti Money Laundering or Anti Terrorist Funding rules and regulations.
A Shadow Ban?
In a release, the Finance Mistry of India has issued a 'compliance show cause notice to 9 VDASPs (Virtual Digital Asset Services Providers)
With Binance being much more popular among Indian traders, other names include the list are Kucoin, Bitfinex, Huobi, MexcGlbal, Bittrex, Bitstamp, Gate.io and Kraken.
What is FIU?
The FIU is the watchdog for non-compliance of AML and ATF policies inside the Indian borders and reports directly to Indian government for any suspicious activity related to offshore funding.
What Is The Basis Of This Notice?
It is also to be noted that all VDASPs fall under the AML-CFT (Anti Money Laundering/Counter Financing of Terrorism) framework. They wer brought under the regime of Prevention of Money Laundering Act 2002 by an amendment in March 2023. This act does not limit to the bodies that are physically present in the country so as to conduct business in India Virtual service providers are also required to follow it.
Impacts of This Ban on Indian Crypto Market
- First of all, crypto as it's decentralized in nature, Indian government for sure has now failed to achieve what it wanted with the heavy imposition of taxes on crypto. So this move is to take control of the exchanges where the traders took shelter to evade taxes. So if the URLs are banned, Indian traders will have to find other ways of dealing with crypto.
- Secondly, as Binance is the platform which is now very popular for P2P trades in India, the traders might be forced to acknowledge on-the-shore exchanges and will have to pay taxes for their gains.
- Furthermore India’s move to ban major crypto exchange URLs might sound dramatic, but it’s essential to note that India isn’t a dominant player in the global crypto market. The impact might be less significant than perceived, as the crypto landscape is vast and resilient.
- Last but not the least, this move may prove as a killing blow for crypto in India because there's no crypto exchange in India that's even a 1% of Binance and Kucoin in terms of faith and services.
Thus it's safe to say that Indian traders, only who believe that crypto regulations may be easier in future, would surely hold to their assets. But those who are small traders will leave the market and this may kill this developing industry in the country.
Don't FUD. No Exchange Banned for Now
But remember this isn't a ban and it's not over for overseas crypto exchanges. It's just a 'Show Cause Notice' as one X user reacts to the FUD.
In A Nutshell
All in all, these rules like AML or CFT should definitely be pursued by any government but they shouldn't be performed to kill an innovation. However Indian government is almost on the verge of killing the hopes for millions of young unemployed Indians.
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