CoinDCX Reports 2000% Increase in Deposits Amid Crackdown on Offshore Exchanges

CoinDCX sees 2000% surge in deposits following show cause notice from finance ministry to 9 major offshore exchanges.

CoinDCX sees massive 2000% surge in deposits following India’s crackdown on offshore exchanges

Source: Shutterstock

India’s leading cryptocurrency exchange, CoinDCX, has seen a massive surge in customer deposits following the issuance of show cause notices to nine major offshore exchanges, including Binance, by the finance ministry. The increase in deposits has reached an astonishing 2000% since December 28.

Offshore Exchanges Face Show Cause Notice

Offshore exchanges such as Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex were all served with show cause notices for non-compliance with local money laundering laws. The Financial Intelligence Unit of India has also requested the blocking of these exchanges’ URLs for their illegal operations in the country.

CoinDCX, in a press release shared with Blocking.net, emphasized its commitment to providing a secure and compliant investment environment for its users. To encourage users to migrate their assets, the exchange is offering incentives to those who choose to move to CoinDCX.

• 🚔 Founder of Ace Exchange Arrested for Alleged Crypto Fraud
• Bitcoin ETFs are on the way, but what about Bitcoin stocks and trusts?
• EU regulators are looking into banks’ involvement with cryptocurrencies.

1% TDS Challenges Trading Volumes

The implementation of 1% TDS (tax deducted at source) on crypto exchanges in July 2022 has had a significant impact on trading volumes in India. Domestic exchanges saw a decline of approximately 90% in trading volume since then.

Between February 2022 and July 2022, three to five million Indian users shifted to offshore platforms to avoid the 1% TDS. However, many of these foreign exchanges did not comply with the tax regulation. As a result, domestic crypto exchanges accounted for 97% of the collected TDS, contributing around $29 million, while trades on offshore platforms by Indians only contributed $840,000, a mere 0.2% of the expected $420 million.

With the recent show cause notices, offshore exchanges now have until January 11 to respond and either implement the TDS or face a complete ban from operating in India.

In an exclusive interview with Blocking.net, a CoinDCX co-founder referred to the 1% TDS as a death blow to the industry.

Local Web3 Advocacy Body Takes Action

The action taken by the Indian government against offshore exchanges was prompted by a formal request from the Bharat Web3 Association (BWA), which serves as the advocacy body for the Indian crypto and Web3 community. CoinDCX, along with other local exchanges, is a member of the BWA.

The letter sent by the BWA Chairman, Dilip Chenoy, to the Secretary of the Department of Revenue within the Indian Finance Ministry urged the government to take action against offshore entities. The request led to the issuance of show cause notices and the blocking of URLs.

Q&A: Addressing Reader Concerns and Additional Information

Q: How will the crackdown on offshore exchanges impact Indian traders? A: The crackdown aims to ensure compliance with local money laundering laws and the implementation of the 1% TDS regulation. It will prevent Indian traders from using non-compliant offshore exchanges and encourage them to operate within the regulated ecosystem. This move is expected to strengthen the domestic crypto market and enhance user protection.

Q: Are there any alternative options for Indian traders to consider during the crackdown? A: Yes, there are alternative options available for Indian traders. CoinDCX, the leading Indian crypto exchange, is providing a secure and compliant investment environment for its users. It offers incentives for users migrating their assets to the platform. Additionally, there are other domestic exchanges that comply with local regulations and provide a safe trading experience.

Q: What are the potential consequences for offshore exchanges that fail to respond to the show cause notices? A: Offshore exchanges that fail to respond to the show cause notices or do not implement the 1% TDS may face a complete ban from operating in India. The government is taking strong measures to ensure compliance and protect the interests of Indian traders. Non-compliant exchanges will be unable to continue their operations within the country.

Future Outlook and Investment Recommendations

With the crackdown on offshore exchanges and the implementation of the 1% TDS, the Indian cryptocurrency market is undergoing significant changes. This regulatory action aims to strengthen the domestic market, increase transparency, and protect users from potential risks associated with non-compliant exchanges.

As the industry evolves, it is crucial for traders and investors to stay informed and choose platforms that adhere to regulations to ensure the security of their assets. Domestic exchanges like CoinDCX provide a reliable and compliant trading environment.

Investors who are interested in the Indian market should closely monitor the developments and adapt their investment strategies accordingly. It is recommended to diversify the investment portfolio and consider long-term prospects.

Reference List

1. India’s Finance Ministry Seeks to Block Binance and Other Offshore Exchanges
2. Open Source Justice: Resolvr Enables Tax Deducted at Source for Crypto Exchanges
3. $1 Billion Frozen Assets: Three Arrows Capital Founders in Legal Trouble
4. Curve Founder Moves $23 Million of CRV on Binance: Time to Take Profit?

---

Thank you for reading! If you found this article informative, feel free to share it on social media to spread the knowledge. If you have any questions or thoughts, let us know in the comments below!

Follow us for more exciting updates and news in the world of blockchain and cryptocurrencies.

🔗 Like us on Facebook 🐦 Follow us on Twitter 📸 Follow us on Instagram

We will continue to update Blocking; if you have any questions or suggestions, please contact us!