Dear Readers, 

With this article, we will be discussing an important crypto update in India.

We all know that India tightens the crypto operations in India and levied stringent operation frameworks on Virtual Digital Assets including the tax.

The Reserve Bank of India always sees a negative overview on the Cryptos in India. 

Hence, many crypto investors and traders moved from Indian Crypto Exchanges to Foreign Crypto Exchanges. 

In the meantime, the Finance Intelligent Unit India (FIU IND) issued a compliance show case notice to nine offshore Virtual digital Assets Providers (VDA SPs) including Binance, Kucoin, Huobi, Kracken, Gate.io, Bittrex, Bitstamp, MEXC Global and Bitfinex.

These foreign origin Crypto Service Providers have not been registered with India's Anti Money Laundering/ Counter Financing of Terrorism (AML CFT) framework. The Government of India has brought all the Virtual Digital Assets Company under this framework in March 2023.

Most of the Indian Crypto Exchanges have joined in this framework.  If registered under this demand, these exchanges have to share the Indian Users and their crypto balance on demand basis to the Government. Currently, the transaction fee in the Indian Crypto Exchanges is 1% Tax Deduction at Source (TdS). If the foreign/off shore crypto companies register under this Government framework, there may be changes to take the 1% TdS also. 

The Indian Government expected that by putting the 1% TdS for every transaction, it expected that the investments in Cryptos would come down. But, people have found various other channels like peer to peer funding and get USDT and started to trade in the foreign crypto exchanges. They also have withdrawn from peer-peer channel which are routed through the normal bank accounts- the Government could not differentiate whether it is a crypto transaction or a normal transaction. 

To rectify this gap, the Government had sent the above notice to all the major foreign crypto exchanges on 28 Dec 2023. 

The FIU IND has also sent a letter to the Ministry of Electronics and Information Technology to block the URLs of the foreign crypto exchanges to block their URL until it comply with the above legal framework. 

The apps would may also comes under problem as the apps would use APIs to communicate to the server. If the URL of the API is blocked, the apps would also be under problem to function. 

This is the important move again by the Indian Government on Cryptos.