Indian crypto exchanges attract investors in Binance, OKX after FIU ban

After the country's finance ministry's Financial Intelligence Unit banned offshore crypto exchanges like Binance, OKX and others, Indian crypto exchanges are offering hassle-free transfers for users who want to transfer their crypto assets from foreign crypto exchanges.

A number of Indian crypto exchanges have created deals to forego lucrative payouts for users whose funds are tied to banned foreign crypto exchanges. CoinDCX – India's largest crypto exchange by trade – has announced that it has allocated $1 million to help users transfer their assets to crypto exchanges.

An estimated $4 billion has been invested in crypto on offshore exchanges by Indian investors. With recent regulatory developments, users trading on offshore exchanges are worried about their assets. They want to go to a safe and compliant exchange to continue their crypto journey. CoinDCX CEO Sumit Gupta told Cointelegraph:

‘We saw an impressive 2000% increase in new revenue in the first week after the show cause notice was issued to non-compliant entities. To strengthen trust in the crypto community, CoinDCX has allocated a $1 million fund to migrate investors from unregulated offshore exchanges to the CoinDCX platform. The exchange is actively supporting users with seamless crypto deposits accompanied by 1% bonus and has opened safe deposit channels for smooth transactions.

Later, another Indian crypto exchange, BuyUcoin, announced zero-fee transfers for users on offshore exchanges in light of the FIU ban. Shivam Takral, CEO of BuyUcoin, told Cointelegraph that he believes the FIU's action is the right step for investor protection and enforcement of capital flight laws and regulations against foreign exchange entities.

WazirX, another popular exchange, announced a 1% bonus for users who transfer their crypto to WazirX. As a result, they saw a 42.3% increase in P2P transactions, a 253% increase in spot transaction volume and a 114% increase in deposits (crypto + INR) from November to January compared to the previous 3 months. WazirX Vice President Rajagopal Menon told Cointelegraph that the recent actions from FIU were long overdue.

I think it's long overdue. Foreign exchange enjoyed at the expense of Indian exchanges because of regulatory and tax arbitrage. It was a bad situation for everyone: Indian consumers had no choice, the government lost tax revenue, and Indian exchanges lost market share.

FIU, an arm of India's finance ministry, has issued notices against Binance, Huobi, Kraken, Gate.io, KuCoin, Bitstamp, MEXC Global, Bittrex and Bitfinex for operating illegally in India. The FIU has given crypto exchanges a one-week window to respond to the notice and has advised the IT department to block URLs of the said foreign crypto exchanges if they fail to comply.

After the FIU announcement on January 10, Apple's India app store has banned all foreign crypto exchanges, but it is still available on the Andiod app store. Within a week, these foreign crypto exchanges were also banned from the Google App Store. This created a sense of panic among Indian users who flocked to foreign crypto exchanges like Binance to escape the 30% crypto tax.

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Many Indian crypto influencers have discussed alternative ways for users to access blocked platforms in India, including through virtual private networks. However, BuyUcoin has countered this and advised that “Indian users may lose all their crypto assets or money due to phishing sites and other online scams as there may be negative consequences of adopting new URLs.”

OKX has reportedly started asking Indian users to update their personal information to comply with local regulations, signaling a move towards FIU compliance.

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