New Delhi, India: The Indian crypto market has recently undergone a radical change with major players in the region such as Wazirx and CoinDcx registering a high influx of users and deposits; while global giant Binance sees massive outshots. This U-turn follows a clampdown on crypto exchange operators based outside India yet offering services in this country, which may lead to unfair competition and money laundering allegations.
Crackdown leads users to migrate and resuscitates local players
- Local Platforms See 250%-400% Deposit Surge:
Two days after India banned banks from dealing with cryptocurrency companies, the number of users and deposits made by WazirX and CoinDCX surged over 400%. This growth is mostly due to the migration of customers from Binance, which held a majority share in India.
- Unfair Competition and Money Laundering Concerns Drive Government Action:
The following crackdown is due to intense domestic lobbying, which argued that the high cryptocurrency transaction tax implemented in mid-2022 unfairly placed it behind unregulated foreign exchanges. Moreover, the possibility of money laundering activities through offshore platforms also contributed to the government’s decision.
Pressure Intensifies with App Store Removal and Website Block
Apple App Store Delists Binance and Others:
In response to the request from the government, Binance and seven other targeted exchanges were removed by Apple’s App Store after being stripped of their storefront in India.
FIU Blocks Website Access:
The FIU went one step further by blocking access to the websites of these channels in India, which played a major role in reducing their Indian audience numbers.
Trading Volumes: A Nuanced Picture
Despite a definite user migration trend, trading volumes are more complicated. WazirX reported no observable change, while CoinDCX saw a slight rise due to a bullish overall trend. But CoinSwitch registered an estimated 30-35% rise in volume, suggesting a better trend towards local platforms.
Geopolitical Considerations Add Complexity
A letter from a think tank to the Indian government, which Bloomberg saw, addresses worries over seven platforms that Chinese origins or founders are targeted. Considering the tense relations between India and China, this could have been another factor that may have affected the choice of government and made the situation more complicated.
Conclusion: Crypto has an exciting future ahead for the Indians
The uncompromising position of the Indian government towards crypto exchanges without registration created a privileged situation for domestic platforms. They are now taking advantage of the Binance exodus of users, recovering lost ground and preparing a revived national crypto market. With the regulatory climate changing and geopolitical tensions introducing another level of uncertainty, India’s crypto space is set to be excitingly unpredictable.
