India is investigating crypto exchanges compliance to foreign exchange laws

The Indian enforcement agency has sent a notice to the crypto exchange to determine if it violates the national Forex Control Act (FEMA). Economic Times India report..

According to the report, regulators have summoned several crypto executives from top exchanges such as CoinDCX and Coinswitch Kuber to answer some transaction questions.

An unnamed government official reportedly said the authorities were investigating every detail of the transaction sent abroad.

According to reports

Transaction history, relationships with foreign exchanges, how much money is coming from India – ED is looking at all the details of offshore transactions. Information is being sought by the exchange, and in some cases its executives are also participating in the investigation.

WazirX said CryptoSlate,

This issue is pending in the Karnataka High Court, where the company and its directors have filed a warrant and the court has passed the interim order. I accepted the order. The problem is a secondary decision.

Wazir X is not the only one to receive such a subpoena.

Indian policy affecting crypto exchange

India’s crypto exchange is facing a difficult time due to the crypto policy of Asian countries.

A WazirX study found that India’s 30% tax on crypto trading affects the trading frequency of traders’ 83%.

Research shows that as a result of high taxes, some Indians are considering transferring cryptocurrency transactions to foreign exchanges.

Meanwhile, India’s KYC-compliant cryptocurrency exchange has recorded a decline in trading volume since July 1 due to the enforcement of a 1% tax deducted from the source rules.

According to data from Crypto India, WazirX, CoinDCX, and ZebPay recorded a reduction of more than 90% in transaction volume since July 1.

1 / Since the new crypto tax rules are applied, the volume of transactions on Indian exchanges has been declining 🔻

Wazirx – $ 195M ➡️ $ 4.5M – 98% 🔻
Coindcx – $ 32M ➡️ $ 2.1M – 93% 🔻
Zebpay – $ 19M ➡️ $ 1.1 million – 94% 🔻
Bitbns – $ 24M ➡️ $ 19.8M – 17% 🔻 (Somehow not so affected) pic.twitter.com/0MnT7EFGyg

— CryptoIndia 🔑 (@CryptooIndia) July 3, 2022

However, some analysts believe it is premature to make a decision, as a clearer picture of the effect of the new rule will be available by the second week of July.