OKX Exchange shuts down its service in India and Delists USDT from the European Economic Area (EEA)

By Raghav Sawhney

OKX Ceases Operations in India: Navigating Regulatory Challenges

OKX, a renowned cryptocurrency exchange headquartered in Seychelles, has made the challenging decision to halt its operations in India. This decision comes as a response to a multitude of regulatory challenges and compliance issues faced by the exchange within the Indian market.

Key Points:

• OKX, a prominent cryptocurrency exchange headquartered in Seychelles, has made the challenging decision to halt its operations in India.
• Regulatory challenges and compliance issues within the Indian market have prompted OKX to reassess its presence.
• India’s evolving regulatory framework, including Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) regulations, has posed significant hurdles for OKX.
• Compliance notices from the Financial Intelligence Unit India (FIU) and app removals by major tech platforms intensified pressure on OKX.
• The exchange communicated its decision to cease operations in India on March 21, 2024, urging users to withdraw funds by April 30, 2024.
• Detailed instructions were provided to users regarding account closure and fund withdrawal, with assurances of fund security.
• OKX’s exit from the Indian market reflects the complexities and challenges faced by foreign cryptocurrency exchanges amidst evolving regulatory landscapes globally.

Background

OKX ventured into the Indian market between August and November 2023, eyeing the burgeoning cryptocurrency sector in the country. However, the journey soon encountered hurdles as India began tightening regulations surrounding crypto-related businesses.

Issues Summary

Regulatory Pressures

1. Tightening Regulations: India has been tightening regulations surrounding cryptocurrency-related businesses, mandating compliance with legal requirements such as Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) frameworks.
2. Compliance Notices: In December 2023, the Financial Intelligence Unit India (FIU) issued compliance notices to OKX and eight other offshore companies, demanding evidence of compliance with India’s rules. Failure to comply could result in severe penalties for the exchanges.
3. App Removal: The situation intensified when major tech platforms, Apple and Google, removed the OKX app from their platforms in India. This move followed warnings from the FIU regarding alleged non-compliance with AML regulations.

OKX’s Response

1. March 21, 2024 Announcement: On March 21, 2024, OKX officially communicated its decision to cease operations in India. The exchange urged its Indian users to close their accounts and withdraw funds by April 30, 2024.
2. Comprehensive Closure Instructions: OKX provided detailed instructions to Indian users, including the closure of margin positions, redemption of funds from Grow products, and the withdrawal of funds by the specified deadline.
3. Assurance of Fund Security: Despite the closure, OKX assured Indian users that their funds would remain secure and accessible until withdrawn from their accounts.

Regulatory Scrutiny

India, like many other countries, has been grappling with how to regulate the burgeoning cryptocurrency industry effectively. The Financial Intelligence Unit India (FIU) issued compliance notices to nine offshore companies, including OKX, demanding evidence of adherence to India’s regulatory framework. These regulations primarily revolve around Anti-Money Laundering and Counter-Financing of Terrorism (AML-CFT) protocols under the Prevention of Money Laundering Act (PML) Act.

Compliance Challenges

OKX found itself in a challenging position as it struggled to comply with India’s evolving regulatory framework. Compliance issues, including registration as a reporting entity and adherence to AML regulations, posed significant hurdles for the exchange.

App Removal and Compliance Warnings

The situation escalated when major tech giants, Apple and Google, removed the OKX app from their platforms in India. This move followed warnings from the FIU regarding alleged non-compliance with AML regulations. The exchange found itself under increasing pressure to address compliance concerns swiftly.

The Final Decision

In light of the regulatory challenges and compliance pressures, OKX made the difficult decision to cease its operations in India. On March 21, 2024, the exchange officially communicated this decision to its Indian users, urging them to close their accounts and withdraw funds before April 30, 2024.

OKX’s decision to shut down its services in India reflects the challenges faced by foreign cryptocurrency exchanges in navigating India’s regulatory landscape. The tightening regulations, compliance pressures, and app removals contributed to OKX’s decision to exit the Indian market. As regulatory frameworks continue to evolve, exchanges like OKX must adapt to ensure compliance while maintaining operational integrity.

Instructions to Users

OKX provided clear instructions to its Indian user base, emphasizing the need to close margin positions, redeem funds from Grow products, and withdraw funds by the specified deadline. The exchange assured users that their funds would remain secure and accessible until withdrawn. Statement from OKX Spokesperson “We recently sent an email to customers in India who had historical CeFi accounts on OKX, and we are helping them close out those accounts.”

“As we offboard those customers their assets will remain secure on the OKX platform. This decision was made in response to recent local regulations directed at offshore exchanges that make CeFi trading available in India. OKX’s DeFi Web3 services remain available to developers and creators in India.”