India’s crypto regulations push OKX to cease local services

The cryptocurrency exchange OKX has announced it will halt its operations in India. This decision follows closely on the heels of increased regulatory scrutiny from India’s Financial Intelligence Unit (FIU). In a notice dated March 21, OKX communicated to its Indian users the need to close their accounts and withdraw funds by April 30. The exchange cited “local regulatory hurdles” as the primary reason for its exit from the Indian market. This development occurs in the backdrop of the FIU’s crackdown on foreign cryptocurrency exchanges for compliance issues.

OKX’s exit is seen as a direct response to India’s stringent regulatory environment. The FIU had earlier issued notices to several foreign crypto exchanges, including OKX, under the Prevention of Money Laundering Act of 2002. These actions are part of a broader effort to bring virtual digital asset service providers under the Anti Money Laundering/Counter Financing of Terrorism (AML-CFT) framework. OKX, in its message to customers, highlighted the challenges in meeting the new registration requirements introduced by Indian authorities, which led to its decision to cease operations.

FIU blocks force OKX out of India

Indian users of OKX are now faced with the task of closing their trading positions and withdrawing their funds in a short timeframe. The exchange has advised users to expedite the withdrawal process to avoid potential losses. This advice covers various products, including margin positions, perpetuals, futures, options, and Grow products like Earn, Loan, and Jumpstart. OKX has reassured its users that their funds will remain safe and accessible for withdrawal until the stipulated deadline.

The withdrawal of OKX from India reflects the broader challenges faced by the country’s cryptocurrency industry. The regulatory landscape for digital assets in India is evolving, with authorities taking a firm stance on compliance and reporting obligations. The FIU’s move to block the websites and applications of major crypto exchanges earlier in January underscores the government’s commitment to regulating the sector. This has had a significant impact on the operations of foreign crypto exchanges in India, influencing their ability to serve the Indian market.

Regulatory environment 

The actions taken by the FIU against foreign cryptocurrency exchanges began in earnest in late December 2023. Accusations of operating illegally through offshore entities prompted the issuance of compliance notices. These notices were aimed at enforcing the AML-CFT framework and ensuring that these platforms meet their reporting obligations to the government. The subsequent blocking of websites and apps of exchanges like Binance, Coinbase, and OKX in January 2024 marked a significant escalation in regulatory enforcement.

This regulatory scrutiny has implications for the future of cryptocurrency operations in India. Exchanges are now required to navigate a complex landscape of legal requirements and compliance measures. The case of OKX highlights the difficulties foreign exchanges face in adapting to these regulatory changes. As the Indian government continues to refine its approach to digital asset regulation, the crypto market in India is likely to undergo further transformations. This evolving regulatory framework will play a crucial role in shaping the country’s accessibility and operation of cryptocurrency services.