India’s Local Crypto and Web3 Advocacy Body Demanded Action Against Overseas Entities: Source
India’s crypto and Web3 association’s advocacy body, the Bharat Web3 Association (BWA), has reportedly requested the Indian government to take action against offshore exchanges. The BWA’s Chairman, Dilip Chenoy, sent a letter to the Indian Finance Ministry’s Department of Revenue Secretary, Sanjay Malhotra, urging them to block the URLs of nine offshore exchanges and issue them show cause notices. According to an anonymous source, the exchanges have been given two weeks to respond to the notice. However, the BWA’s letter also requested a one-month grace period for offshore exchanges to register with India’s Financial Intelligence Unit (FIU). It remains unclear whether the BWA’s letter solely instigated the action or if the government would have taken similar steps independently.
In March, India’s Finance Ministry mandated that crypto businesses must register with the FIU and comply with anti-money laundering processes. Since then, 31 domestic entities have registered themselves with the FIU. The offshore exchanges targeted in the recent move include Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. None of these entities have responded to requests for comment. The BWA and Indian cryptocurrency exchanges have been facing challenges after the government imposed high taxes on the industry, including a 30% tax on crypto profits and a 1% tax deducted at source on all transactions. These measures have reportedly prompted millions of Indian traders to move their transactions offshore, resulting in revenue loss for the government. The BWA’s letter also called for the offshore exchanges to establish an Indian subsidiary, deposit the applicable tax deducted at source, and restrict access if they fail to comply. Furthermore, the letter asked for 30 days for Indian retailers to withdraw their assets before implementing any restrictions.