The Indian government blocked access to the popular cryptocurrency exchange Gate.io on December 10, 2024 with a message displayed on the website that read: “The website has been blocked as per the order of the Ministry of Electronics and IT to under the IT Act, 2000.”
Users were shocked, many were unable to access their funds or make any transactions. Customers reported receiving error messages on the website stating that they were “attempting to access our services from a restricted location where Gate.io is unable to provide services.”
Gate. io has been restricted in India, preventing users from accessing their funds or making withdrawals. pic.twitter.com/HIRAoxfPjA
— India Crypto Research (@icr_indiacrypto) December 10, 2024
One of the users posted on X – “@gate_io banned by Indian government! The website is down, but the app still works. My advice: move your funds to a hardware wallet as soon as possible.”
Meanwhile, others pointed out that neither Gate.io nor other platforms issue a statement regarding the ban. The confusion has left thousands of traders stranded with no control over their crypto assets.
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Regulatory challenges for cryptocurrency exchanges in India
Gate.io’s closure follows a pattern seen with many other global exchanges that have faced regulatory challenges in India.
Many major cryptocurrency exchanges such as Bitfinex, Kraken, Huobi and MEXC Global have been similarly blocked for failing to comply with local and Prevention of Money Laundering (PMLA) laws.
India’s Finance Ministry’s Financial Intelligence Unit (FIU) is set to hear requests from seven offshore cryptocurrency exchanges to reinstate their operations in the country, as they were previously blocked for failing to register as reporting entities and compliance with AML requirements.
“We will hold a hearing of cryptocurrency exchanges this week and based on their presentation a decision will be made on the future course of action,” a senior FIU official said.
The FIU is reportedly considering lifting the bans, provided these exchanges pay outstanding Goods and Services Tax (GST) dues of ₹2,900 crore ($350 million) and agree to compliance measures more rigorous.
This includes adhering to KYC (Know Your Customer) norms, reporting suspicious transactions and relocating its servers to India in line with Ministry of Electronics and Information Technology (MeitY) guidelines.
Meanwhile, cryptocurrency giant Binance managed to resume its operations in India after paying a fine of ₹18 crore ($2.5 million) earlier this year, managing to align with local regulations.
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India’s position on cryptocurrency regulation
In August 2024, India’s Ministry of Finance clarified that there were no immediate plans to legislate the sale and purchase of cryptocurrencies. However, Virtual Digital Asset Service Providers (VDASPs) are classified as reporting entities under anti-money laundering laws.
In response to a question from the lower house, Pankaj Chaudhary, finance minister, said the government does not have data on the total value of digital assets held by Indians or the number of exchanges operating in the sector due to its unregulated nature .
“All jurisdictions, including India, are expected to assess country-specific characteristics and risks and engage with standard-setting bodies and the G20 to adequately consider all necessary measures for cryptocurrencies,” Chaudhary said .
Despite the absence of comprehensive legislation, the government has introduced measures to ensure accountability of crypto platforms. For example, VDASPs are set up to act as reporting entities to reduce financial crime risks while ensuring a safer environment for the virtual asset market.
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