MeitY’s action comes as the Financial Intelligence Unit (FIU) under the Finance Ministry issued show cause notices to nine offshore VDA platforms such as Binance, Kucoin, and OKX.
Take the case of the crypto exchange platform, CoinDCX. The platform has seen a 2,000 per cent increase in deposits.
“Since the FIU notification, we have seen a significant surge, with a 2,000 per cent increase in crypto deposits, showcasing a strong response from investors to our compliance-focused approach,” said Sumit Gupta, co-founder, CoinDCX; a crypto exchange platform.
Similarly, other platforms have recorded an identical increase in crypto activity since the past two weeks.
“We saw about 35,000 investors come in since the FIU notice came out and deposit roughly $2.5 million in the past couple of weeks. A vast majority of this number has been just in crypto deposits, likely people moving their funds to ensure they remain on a compliant platform,” said Edul Patel, chief executive officer (CEO), Mudrex; a platform for crypto investments.
Patel said his company has recorded a 20 per cent jump in active users when compared to activity prior to the FIU notice. Currently, the platform has recorded a monthly active user base of over one lakh.
Companies like CoinSwitch have reported a 30-35 per cent increase in daily transaction volumes since the aforementioned notice.
Meanwhile, homegrown crypto players are utilising strategies to attract investors who have invested in offshore crypto platforms.
“We began a slow rollout of crypto deposits for over 100 crypto assets on CoinSwitch PRO to enable users to secure their funds in a platform that is fully compliant with the Indian rules and regulations by just following a few simple steps. To further incentivize responsible trading, we have announced a 2 per cent guaranteed cashback for crypto deposits to CoinSwitch PRO,” said Balaji Srihari, Business Head, CoinSwitch; a Bengaluru-based crypto exchange platform.
Similarly, CoinDCX announced the allocation of a fund worth $1 million to help investors transfer their holding to the platform.
“To reinforce trust within the crypto community, CoinDCX has earmarked a $1 million fund to aid investors in asset transfers from non-compliant offshore exchanges to CoinDCX exchange. We are actively supporting users, providing seamless crypto deposits with a 1 per cent bonus, and opening deposit routes for a secure transition,” Gupta added.
That said, to keep in line with regulation, the cost of compliance has gone up for crypto players in the country as regulation is still in the works.
“When it comes to compliance, the primary challenge arises from the fact that crypto is a young asset class. This means that regulations are constantly being updated and improved. As a crypto platform, this can become a game of catch-up. As for the cost of compliance, we are spending 5x of what we used to,” Patel from Mudrex added.
However, he explained that despite rising costs, compliant platforms will encourage investors to invest in crypto.
“We are always in the first line to get things done because no matter the cost, the benefits are there for all to see, and ultimately, it will encourage more people to join us in the world of crypto investing,” he explained.
First Published: Jan 14 2024 | 6:15 PM IST
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