Indian Financial Intelligence Unit Checkmates International Crypto Exchanges | But May Not Help Domestic Crypto Exchanges Either

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**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.

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Indian Finance Ministry’s Show-Cause Notice to International Crypto Exchanges | And Its Effects | TLDR

In my article yesterday we saw the impact of the Indian Finance Ministry’s show cause notice on nine international exchanges. More Indian users from exchanges like KuCoin, Binance, Gateio, MEXC, and others, have moved their funds to Indian crypto exchanges. This worked well for the Indian crypto exchanges, which saw a surge in deposits ranging from 200% to 2000%.

Now that the dust has settled since 28th December 2023, other concerns are rearing its head. You see, much like in 2017, exchanges around the world have a collaboration when it comes to liquidity. Of that, Binance is a key player. Indian Exchanges too rely on their international counterparts for liquidity.

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The concern is, if these exchanges refuse to toe the line or scale down their operations for Indian customers, what happens to the operations of Indian crypto exchanges? Logically, they would suffer too. That’s the word of caution that crypto experts have asked India to be cognizant of.

Here is one of the articles on Mint: https://www.livemint.com/news/india/fiu-action-bodes-ill-for-local-crypto-exchanges-11704820218300.html

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Regulations Vs. Liquidity | Both Are Important | Two Sides of The Same Coin

Further to the Indian Finance Ministry’s show-cause notice to nine international exchanges, and the momentary spike in deposits on Indian crypto exchanges, the news may not seem to be all that good. While regulations are important and no country would want to bypass them, the requirement of liquidity in the crypto space is also a known reality. The need of the hour is to balance liquidity and regulations.

While regulations are a welcome move, it appears that the international exchanges wouldn’t be in any hurry to comply. In other words, a momentary inability to operate in the Indian market wouldn’t be seen as a big problem for international exchanges. However, the Indian crypto exchanges, which depend on liquidity from their international counterparts, may face an issue if the problem persists.

To complicate matters, Indian regulations taxing each crypto transaction and 30% of the crypto earnings (or profit) make the Indian crypto market unviable for international players. Not only this but also Indian crypto exchange players wanting to go abroad will also have to rethink their strategy.

Overall, if the crypto market in a country depends on the crypto exchanges, then the current scenario under the Financial Intelligence Unit’s (FIU) crackdown may seem detrimental to the crypto space. While only time will tell how things pan out, it does seem to be unfavorable at the current moment.

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**News Courtesy:** Mint (link provided in the article)

**Image Courtesy:** Ijmaki at Pixabay

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