Indians are turning to local exchanges amid clampdown on foreign platforms
India blocked access to global crypto exchanges, including Binance, KuCoin, and OKX, on Jan. 12. India has instituted an IP block that prevents Indians from accessing the URLs of foreign crypto platforms.
As per CryptoSlate’s investigation, however, it was still possible to access the websites of Binance, OKX, and KuCoin via Google Chrome without using a virtual private network (VPN), as of the time of publication. The Binance website could also be accessed via Safari and Mozilla Firefox browsers without any VPN, although OKX and Kucoin websites were inaccessible.
The Ministry of Electronics and Information Technology asked Apple to restrict Indians from accessing foreign exchange applications on Jan. 10. As of the time of writing, both the iOS and Android app stores have restricted access to foreign crypto exchange applications to Indians.
The move comes after the Finance Ministry’s Financial Intelligence Unit (FIU) warned that some international exchanges may have been for money laundering, a government official told the Economic Times.
Clamping down on foreign exchanges
The FIU’s warning came about two weeks after it issued show-cause notices to nine foreign exchanges operating in India. This included Binance, KuCoin, Huobi, OKX, Kraken, Gate.io, MEXC Global, Bitfinex, and Bittrex.
The show-cause notice alleged that the exchanges were operating illegally in India and not complying with the anti-money laundering laws. A show-cause notice is a formal document that alleges wrongdoing and asks companies to explain why disciplinary action should not be taken against them.
The show cause notice gave the exchanges two weeks to explain, which expired on Friday.
The recently levied restrictions will prevent Indians from downloading the application of the foreign exchanges. However, those who already have the applications downloaded can still access them. Withdrawing the cryptocurrencies may, however, prove a problem as UPI withdrawals will no longer be available.
In an email to users, Binance said:
“We are working hard to engage in constructive policy-making that seeks to benefit every user and all market participants. All user funds are safe.”
Binance added that it remains “committed to the adherence of local regulations and laws.”
Indian exchanges are thriving
Indian exchanges had been hemorrhaging users to foreign platforms after India implemented a 1% tax deducted at source in 2022. Several investors moved to overseas platforms to avoid the taxes.
The recent clampdown, however, is set to level the playing field as Indian investors have already started flocking to the local platforms. WazirX, for instance, saw deposit inflows jump by 250% in the four days after the issue of the show-cause notice compared to the four days before it, Bloomberg reported. WazirX used to be owned by Binance until an unceremonious and bitter split in 2022.
WazirX rival CoinDCX has also gained users since Dec. 28. Mudrex, a Y combinator-backed local exchange gained 30,000 new users since Dec. 28, according to the Bloomberg report.
With foreign platforms becoming nearly impossible to access, Indians wishing to trade cryptocurrencies will have no choice but to use local platforms, which are set to see more user and deposit inflows.
The cryptocurrency market in India has been experiencing a significant shift in recent times. With the Indian government tightening regulations on foreign cryptocurrency exchanges, many Indians are turning to local exchanges to meet their trading needs. This trend is not only a response to the clampdown on foreign platforms but also reflects the growing popularity and maturity of the local cryptocurrency ecosystem. In this article, we will explore the reasons behind this shift and the advantages of using local exchanges.
Reasons for the Shift to Local Exchanges
Several factors have contributed to the growing popularity of local cryptocurrency exchanges among Indian traders. Some of the key reasons for this shift include:
1. Regulatory Uncertainty: The Indian government has been taking a tough stance on foreign cryptocurrency exchanges, creating a sense of uncertainty among traders who previously relied on these platforms. The regulatory crackdown has led to many foreign exchanges suspending their services in India, leaving traders in search of alternative options.
2. Trust and Security: Local cryptocurrency exchanges are often perceived as more trustworthy and secure by Indian traders. The familiarity and proximity of local platforms create a sense of confidence and reassurance, especially in the midst of regulatory upheaval.
3. Support for Indian Rupee (INR) Trading Pairs: Local exchanges typically offer trading pairs with the Indian rupee (INR), making it easier for Indian traders to buy and sell cryptocurrencies directly using their national currency. This eliminates the need for complex currency conversions and reduces trading costs.
4. Engaging Customer Support: Local exchanges are known for providing personalized and responsive customer support, often in regional languages, which adds to the overall user experience. This level of support is highly valued by Indian traders who seek assistance in their native language.
5. Economic Benefits: By using local exchanges, Indian traders can contribute to the growth of the domestic cryptocurrency market and support the development of indigenous blockchain technology. This aligns with the government’s push for self-reliance and the promotion of local entrepreneurship.
Advantages of Using Local Exchanges
In addition to the specific reasons mentioned above, using local cryptocurrency exchanges offers several advantages for Indian traders. Some of these benefits include:
1. Familiarity and Convenience: Local exchanges are more attuned to the needs and preferences of Indian traders and often provide interfaces and tools that are familiar and convenient for the local market.
2. Lower Transaction Fees: Many local exchanges offer competitive trading fees and lower transaction costs compared to their foreign counterparts, making it more cost-effective for Indian traders to engage in cryptocurrency trading.
3. Swift Withdrawals and Deposits: Local exchanges typically facilitate faster withdrawals and deposits, particularly for INR transactions, allowing traders to access their funds more efficiently.
4. Regulatory Compliance: Local exchanges are committed to adhering to Indian regulations and compliance standards, providing peace of mind to traders who are concerned about legal and regulatory issues.
Real-World Examples and Case Studies
To illustrate the growing trend of Indians turning to local exchanges, let’s take a look at some real-world examples and case studies:
Case Study 1: CoinDCX, India’s Largest Cryptocurrency Exchange
CoinDCX is one of the leading cryptocurrency exchanges in India, offering a wide range of trading pairs and advanced trading features. As foreign exchanges faced regulatory pressure, CoinDCX experienced a surge in user registrations and trading volumes, indicating a clear shift towards local platforms.
Case Study 2: WazirX, a Pioneer in INR Trading Pairs
WazirX, another prominent Indian cryptocurrency exchange, has gained popularity for its extensive support for INR trading pairs and seamless fiat-crypto transactions. The platform has witnessed a significant increase in user engagement as traders seek alternatives to foreign exchanges.
Practical Tips for Indian Traders
For Indian traders considering the transition to local exchanges, here are some practical tips to ensure a smooth and rewarding experience:
1. Research and Due Diligence: Before choosing a local exchange, conduct thorough research to assess the platform’s reputation, security measures, and regulatory compliance.
2. User-Friendly Interface: Look for exchanges that offer intuitive and user-friendly interfaces designed specifically for Indian traders, ensuring a seamless trading experience.
3. Local Support and Communication: Opt for exchanges that provide regional language support and responsive customer communication to address any queries or concerns effectively.
4. Security Features: Prioritize exchanges with robust security features, such as two-factor authentication, cold storage for funds, and regular security audits.
Conclusion
The shifting landscape of the cryptocurrency market in India has prompted many Indian traders to seek alternatives to foreign exchanges, leading to a surge in the adoption of local platforms. This shift not only reflects the evolving regulatory environment but also highlights the appeal and advantages of using local exchanges. As the Indian cryptocurrency ecosystem continues to mature, local exchanges are poised to play a pivotal role in shaping the future of cryptocurrency trading in the country.
In conclusion, the decision to turn to local exchanges amid the clampdown on foreign platforms represents a strategic move by Indian traders to secure their investments and contribute to the growth of the domestic cryptocurrency market. By leveraging the advantages of local exchanges and following practical tips, Indian traders can navigate the evolving landscape of cryptocurrency trading with confidence and resilience.
By embracing local exchanges, Indian traders are not only diversifying their options but also empowering the indigenous cryptocurrency ecosystem, paving the way for sustainable growth and innovation in the Indian cryptocurrency market.
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It’s great to see more support for local exchanges and the growth of the local cryptocurrency market! #SupportLocal
Nice project