Disclaimer: Does this look like financial advice? You are right. It isn’t. Treat it so.
“Do Your Own Research” (DYOR) is not a fad but an important element of the cryptoverse. Do keep that in mind.
Indian Finance Ministry’s Show-Cause Notice to International Crypto Exchanges | That’s the TLDR
A couple of weeks back the Indian Finance Ministry issued a show cause notice to international crypto exchanges like KuCoin, Gateio, MEXC, Binance, and more for not complying with Indian regulations. There was a chance that the websites would be blocked in India and that saw the flight of Indian citizens' funds from these international exchanges.
All the influx of funds was directed towards local Indian exchanges which were following the Financial Intelligence Unit’s (FIU) regulations. As such, local exchanges like CoinDCX, WazirX, BuyUCoin, and others saw a surge in deposits. Not only the deposits but also trades witnessed a surge.
Such movement of funds would likely continue unless the international exchanges follow the FIU’s norms and respect the Indian regulatory framework.
Regulations in the Indian Crypto Space | Everything Other Than TLDR
Following India’s call for a global framework for crypto-related financial interactions at the G20 Summit, India developed its own local Financial Intelligence Unit’s (FIU) norms for regulation. The Indian crypto exchanges were largely complying with these norms, while the international exchanges weren’t. The call for the same was made to ensure nefarious actors do not play in the crypto space, hurting the Indian users.
On December 28, 2023, the Finance Ministry issued a show-cause notice to nine international exchanges including Binance, KuCoin, Gateio, MEXC, and the likes. The intention, it is supposed, was to make these exchanges comply with the domestic norms and regulations. There were also murmurs that these exchange websites could be blocked in India if they did not comply with the norms.
The news set the Indian crypto users in motion, withdrawing their assets from the named international exchanges to Indian exchanges. This resulted in an increase in deposits of over 2000% in CoinDCX, 250% in WazirX, and similar numbers in other exchanges in India. Even small exchanges witnessed a surge in deposits. So, the Indian exchanges complying with the laid down norms and regulations benefited the most. Not only was there a surge in deposits but also transactions and trades.
But why International Exchanges when there are Indian Exchanges? Here’s why.
Why International Exchanges When There Are Domestic Ones? | The Reason
There is no rocket science as to why. Let’s take an example of stock markets, and then we will come to crypto markets. If I wanted to buy shares of Tesla, I would necessarily have to buy them from NYSE as Tesla is not listed on NSE in India. So, based on the stocks I want to buy, I may register with exchanges beyond India’s borders.
The same logic applies to crypto exchanges. While the main coins like BTC, ETH, XRP, and likes would be available across exchanges, some specific tokens like Moons or Donut of Reddit would not be available everywhere. So, if I, as an investor, wanted to buy Moons or Donuts, I would necessarily have to look at international exchanges since these are not available on the Indian exchanges.
So, the basic premise is the ability of investors and traders to find the coins/tokens of their choice. In this endeavor, they end up going to international exchanges. This is true for all markets and countries.
What Next?
In the pursuit of norms and regulations, such hick-ups are expected not only in India but in every country in the world. It is a passing phase, where exchanges learn to comply with international norms and regulations. In doing so, they really become international crypto exchanges.
So, we are in a phase where we will have more and more truly international crypto exchanges. This is a good place to be, and we as users, can only benefit from the move!
News Courtesy: Economic Times – India; dated 6th January 2024
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