India's Reserve Bank Declares List of Unauthorised Forex Trading Platforms
The list includes the likes of IQOptions, Binomo, eToro and more who heavily advertised in India
Not just crypto, or Chinese Loan apps, but for a very long time, many options trading platforms have been eyeing the Indian markets. And why not? With an internet population of 800 Million, India is the most lucrative market to get customers for your online business.
At a point, all ads we could see on platforms were the likes of OctaFX, Binomo, and IQOptions. If English ads didn’t work, there were Hindi computer-generated versions of them. When that possibly didn’t work, they got influencers to work their magic. So many crypto influencers in India have made videos on these platforms or even worked with them.
I can’t count the times I have been asked if IQOptions, Binomo, OctaFX and others are legal to use in India. I have always told them not to use it. I tried once, but the transaction failed, and yet the bank cancelled my credit card. This was in 2017 when I was also influenced by their ads and wanted to check them out.
Today we have an answer to say they are not authorised to operate in India. India’s central bank, the Reserve Bank of India recently issued an “Alert List” comprising names of apps and entities that have not been authorised to deal in forex and to operate electronic trading platforms for forex transactions.
Users of these unauthorised platforms may be prosecuted, according to RBI.
These platforms ran lucrative promotions to attract users to sign up on their platforms, but as it is with binary options - the biggest product on many such platforms, users would end up losing all of their money.
Binary options on these platforms are simple in theory, you say the price of a listing will go up or down in a short period of time, if you get it right, you earn a bit more than what you traded, if wrong, you lose the amount you put forth. I wouldn’t want to call it gambling, but honestly, it is akin to gambling or trading with 100x leverage.
The predatory behaviour of these forex and options platforms had not gone unnoticed. In February 2022, RBI warned users against using unauthorised platforms for Forex transactions as it would lead to a violation of the Foreign Exchange Management Act (FEMA).
Nevertheless, these platforms continued to gain customers. Eventually, the RBI had to issue a clear list of platforms to avoid. The RBI also cautions that it should not be automatically assumed that if any name is not on the list, it is authorized by the central bank.
The RBI notice added,
The RBI reiterates that resident persons can undertake forex transactions only with authorised persons and for permitted purposes, in terms of the FEMA. While permitted forex transactions can be executed electronically, they should be undertaken only on ETPs authorised for the purpose by the RBI or on recognised stock exchanges viz., National Stock Exchange of India Ltd., BSE Ltd. and Metropolitan Stock Exchange of India Ltd.
Members of the public are once again cautioned not to undertake forex transactions on unauthorised ETPs or remit/deposit money for such unauthorised transactions. Resident persons undertaking forex transactions for purposes other than those permitted under the FEMA or on ETPs not authorised by the RBI shall render themselves liable for legal action under the FEMA.
Are Crypto Platforms Authorized to Operate?
If RBI can simply declare a list of platforms not authorized to operate in India, then are all the international and domestic crypto exchanges legal and authorized as the bank has not said anything about that?
The short answer is that RBI has no authority over crypto exchanges. In fact, no government authority is defined to be the regulator of crypto exchanges. Hence, technically, no authority can declare which are and which aren’t authorized platforms for crypto trading.
This also means that you may have no protection from the government in case you lose money on crypto exchanges.
Meanwhile, the Enforcement Directorate is continually raiding crypto exchanges in order to determine if they were involved in violation of PMLA - Prevention of Money Laundering Act.
But if you know anyone using the Options platforms in the list above or pretty much dealing with Forex Options anywhere, you should warn them. Share this article and warn them now.
Also, if you want to have fun, why don’t you share this article and tag people in crypto who promoted the Binary options platform vehemently? Do it. Or leave a comment below.
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