Crypto exchange OKX to halt India operations

Crypto exchange OKX is set to halt its India operations from April 30.

As per news reports, the company sent an email to its users saying that it will no longer provide its services in India. The company has also advised users to withdraw their funds by April-end.

The move comes shortly after the Financial Intelligence Unit (FIU) sent a request to the Ministry of Electronics and Information Technology (MeitY) to block the websites of notified crypto exchanges.

Reports suggest that OKX implemented rigorous know your customer (KYC) procedures and checks soon after that move.

Responding to queries sent by The Decrypting Story, a spokesperson for OKX said, "We recently sent an email to customers in India who had historical CeFi accounts on OKX, and we are helping them close out those accounts. As we offboard those customers, their assets will remain secure on the OKX platform."

"This decision was made in response to recent local regulations directed at offshore exchanges that make CeFi trading available in India. OKX's DeFi Web3 services remain available to developers and creators in India."

What is the existing rules?

The virtual digital assets service providers operating in India (both offshore and onshore) and engaged in activities like the exchange between virtual digital assets and fiat currencies, transfer of virtual digital assets, safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets etc are required to be registered with FIU IND as 'Reporting Entity' and comply with the set of obligations as mandated under Prevention of Money Laundering Act (PMLA) 2002.

OKX, along with other prominent players like Binance have struggled to operate in India owing to a rough regulatory climate. Even domestic players like Pillow and Flint have had to shut operations or pivot their projects to deal with the regulatory hurdles.

Taxes on cryptocurrencies remain high, as the government has levied a 30% tax slab on cryptocurrency income with no option to offset losses besides a 1% tax deducted at source. However, despite these challenges, domestic cryptocurrency exchanges remained particularly optimistic as they expect more institutional investors to return to exchanges following the SEC's move to approve Bitcoin ETFs.

(The story was updated with the responses from OKX.)