In a bold move echoing Apple’s recent action, Google has taken a stance against cryptocurrency platforms in India by removing several of them from its Play Store. The affected giants in the crypto world, including Binance and Kraken, were singled out, and the timing coincides with growing pressure from the Indian government on digital asset companies.
Government’s crackdown on crypto companies
The Indian government, through its Financial Intelligence Unit India, has declared its intent to block the URLs of nine offshore virtual digital asset service providers. Their reasoning? Alleged non-compliance with India’s Prevention of Money Laundering Act. These measures represent a clear signal of the government’s commitment to regulating the cryptocurrency space more rigorously.
Crypto market challenges in India influenced Google’s decision
India’s crypto enthusiasts have faced mounting challenges, including a 30% capital gains tax and a 1% transaction levy that came into effect in 2022. These new levies have driven local crypto traders to explore global platforms with less stringent Know Your Customer (KYC) requirements. The combination of tougher regulations and a broader market downturn has resulted in a staggering 97% decline in trading activity on India’s WazirX exchange over two years.
Furthermore, 2023 witnessed a significant increase in fines imposed on crypto exchanges and FinTechs, totaling a staggering $5.8 billion. This marked the first year in which penalties against these firms surpassed those against traditional financial companies. The fines primarily revolved around lapses in money laundering precautions, customer verification, and other financial crime-related issues.
In contrast, traditional financial services companies only paid $835 million in fines last year, marking the lowest figure in a decade. Google’s decision may have been a move to not be seen to be supporting potential lapses in the above-mentioned regulations in the crypto market.
Challenging year for crypto startups
The year 2023 proved to be an arduous journey for crypto startups seeking funding. Venture capital investments in the sector plummeted to a mere $9.5 billion for the year, representing less than a third of the previous year’s total. The fourth quarter of 2023 was particularly turbulent, with high-profile cases of fraud and money laundering casting a shadow over the industry.
For instance, in November, FTX co-founder Sam Bankman-Fried faced multiple fraud charges, while Binance CEO Changpeng Zhao pleaded guilty to violating anti-money laundering requirements in the same month. These developments coincided with a sharp decline in crypto venture funding, which dwindled to just $1.8 billion during the fourth quarter – a mere half of the 2022 figure.
Google’s decision to follow in Apple’s footsteps and remove cryptocurrency apps from its Indian Play store underscores the mounting pressure on digital asset companies in India. The government’s crackdown, along with regulatory changes and a challenging market environment, has significantly impacted the cryptocurrency landscape in the country. Crypto startups are navigating a challenging path, marked by legal issues and dwindling venture capital funding, while the industry as a whole faces increased scrutiny and evolving regulations.
