Google Removes Binance and Other Global Crypto Apps from Indian Play Store

Google has taken action against several cryptocurrency exchanges, including Binance and Kraken, by removing their apps from the Play Store in India. This move is a significant setback for India's aspirations in the web3 space, as the country grapples with the challenges of regulating the burgeoning crypto market. The ban follows recent allegations of these global crypto exchanges operating "illegally" in the South Asian market, with the Financial Intelligence Unit (FIU), an Indian government agency overseeing financial transactions, issuing show cause notices to nine crypto firms for non-compliance with India's anti-money laundering rules.

Earlier this week, Apple also removed the apps, and telecom networks and internet service providers started blocking the URLs of these crypto exchange websites. The FIU had urged India's IT Ministry to block the websites of all nine services in the country. Apart from Binance, other affected exchanges include Huobi, Gate.io, Bittrex, and Bitfinex. Binance clarified that the IP block impacts users attempting to access the Indian iOS app store or the Binance website from India, while existing users with the app are unaffected. The company expressed its commitment to adhering to local regulations and laws, pledging ongoing communication with regulators for user protection and the development of a healthy Web3 industry.

Against the backdrop of India's onerous 30% capital gains tax and 1% transaction levy imposed in 2022, many domestic cryptocurrency traders have shifted to global platforms with less stringent know-your-customer protocols. This regulatory arbitrage, combined with a broader crypto winter, has led to a substantial 97% decline in trading activity on WazirX, a popular Indian exchange, over the past two years.

Despite this trend, well-funded Indian platforms like CoinSwitch Kuber and CoinDCX continue to enforce rigorous identification verification. Traders migrating to global platforms appear to be avoiding such scrutiny, raising concerns of classic tax avoidance behavior according to fiscal authorities. Ashish Singhal, co-founder and CEO of CoinSwitch, emphasized the importance of compliance with India's Prevention of Money Laundering Act (PMLA) requirements for Virtual Asset Service Providers (VASPs). Singhal urged offshore exchanges to register with the FIU-IND and comply with India's Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) measures for enhanced consumer protection and regulatory oversight.

India has a history of taking a tough stance on cryptocurrencies, with the Reserve Bank of India implementing a ban on them about five years ago. While the ban was later overturned by India's Supreme Court, the central bank has persistently advocated for outlawing crypto, likening virtual digital assets to a Ponzi scheme.