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.”