The Indian government blocked access to the popular cryptocurrency exchange Gate.io on 10 December 2024 with a message displayed on the website saying, “The website has been blocked as per order of the Ministry of Electronics and Information Technology under IT Act, 2000.”
Users were left shocked, with many unable to access their funds or carry out any transactions. Customers reported receiving error messages on the website saying 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, leaving users unable to access their funds or make withdrawals. pic.twitter.com/HIRAoxfPjA
— India Crypto Research (@icr_indiacrypto) December 10, 2024
One of the users on posted on X – “@gate_io banned by the Indian government! Website is down, but the app still works. My advice: Move your funds to a hardware wallet ASAP.”
Meanwhile, others pointed out that neither Gate.io nor any other platform send a statement regarding the ban. The confusion has left thousands of traders stuck with no control over their crypto assets.
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Regulatory Challenges For Crypto Exchanges In India
The closure of Gate.io follows a pattern seen with several other global exchanges that have faced regulatory challenges in India.
Many prominent crypto exchange platforms like Bitfinex, Kraken, Huobi, and MEXC Global were similarly blocked for failing to comply with the local as well as Prevention of Money Laundering Act (PMLA) laws.
The Financial Intelligence Unit (FIU) under India’s Ministry of Finance is set to hear pleas from seven offshore crypto exchanges to reinstate their operations in the country, as they were previously blocked for not registering as reporting entities and for non-compliance with AML requirements.
“We are holding a hearing of the crypto exchanges this week and based on their submission a decision on the future course of action will be taken,” a senior FIU official said.
The FIU is reportedly considering lifting the bans, provided these exchanges pay pending Goods and Services Tax (GST) dues amounting to ₹2,900 crore ($350 million) and agree to stricter compliance measures.
This includes adhering to KYC (Know Your Customer) norms, reporting suspicious transactions, and transferring their servers to India in line with the Ministry of Electronics and Information Technology (MeitY) guidelines.
Meanwhile, crypto giant Binance has managed to resume its operations in India after paying a fine of ₹18 crore ($2.5 million) earlier this year while managing to align itself with local regulations.
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India’s Stance On Crypto Regulations
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 the AML laws.
In response to a question from the lower parliament, Pankaj Chaudhary, Minister of State for Finance, stated that the government lacks 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 evaluate their country-specific characteristics and risks, and engage with standard-setting bodies and the G20 to appropriately consider any necessary measures for crypto assets,” said Mr Chaudhary.
Despite the absence of comprehensive legislation, the government has introduced measures to ensure accountability among crypto platforms. For instance, VDASPs are provisioned to act as reporting entities to reduce risks to financial crimes while ensuring a more secure environment for the virtual assets market.
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