Mumbai: Outside the wonderworld of crypto cultists, few face the travails of 'withdrawal' -- the process of moving digital assets from trading platforms to external destinations, often a private wallet.While there's no law prohibiting it, large Indian crypto exchanges either bar or actively discourage such transfers amid fears that cryptos pulled out can be misused to launder money, sidestep foreign exchange regulations, or undertake sinister activities. Exchanges don't want to come in the line of fire when law enforcers go after offenders.However, Binance, the world's largest crypto exchange by trading volume, with 5 to 10 crore users in India, takes a different tack. When asked whether Binance allows free withdrawal by users in India, its South Asia spokesperson said, "We stand advised that there are no requirements set out in legislation, regulations, directives, guidelines or rules specifying withdrawal limits on virtual digital assets (VDAs) on end users of centralised exchanges."AgenciesGrey Area Transfer of digital assets to private wallets before moving them overseas a minefieldCrypto TrackerTOP COINS (₹) 63,105 (2.17%)7,532,082 (1.58%)133 (1.55%)206,949 (1.48%)97 (0.21%)GLOBAL RULES"This," she said, "is consistent with global rules on not impeding rights of users to access their assets absent justification. In fact, to do so would run contrary to the philosophical premise of digital assets and financial independence."This is not to suggest that centralised exchanges don't have to comply with applicable laws and KYC regulations, the official told ET. Binance is registered with FIU-IND, the GOI agency tracking intelligence about money laundering offences. Like domestic platforms, Binance shares data, including withdrawals, with it.A crypto buyer in India can place an order on Binance, find a local seller on a peer-to-peer basis, and transfer funds separately through banks once the seller shares account details. Cryptos bought can be withdrawn into private or unhosted wallets, or stored in the user's laptop or hardware wallet similar to a pen drive.On Binance one can withdraw cryptos worth as much as $8mn.Typically, exchanges ask for details when cryptos flow into external wallets. But persons bent on dodging rules, like the $250,000 annual overseas remittance cap, or entities planning to surreptitiously move money, may try withdrawal windows to transfer VDAs that are later sold, swapped, and stored overseas, or paid to acquire offshore assets.TWILIGHT ZONE"Given the increasing use of VDAs in cybercrime for cross-border fund movements and offshore betting, there's need for either a dedicated legislative framework governing cross-border transfers or for RBI to recognise cryptos as 'currency' under FEMA," said Harshal Bhuta, partner at the CA firm P. R. Bhuta & Co.Given the FIU-IND data, disclosure in tax returns, and information shared by countries, sharp withdrawal practices may subsequently surface. But, it may be too late, and some may escape.While Indian exchanges have their reasons, Binance thinks adopting "non-prescriptive shadow requirements" as legal requirements" creates uncertainty. Post KYC, a user who's monitored, shouldn't be prevented from accessing his verified assets, said the company. This, it states, is consistent with Financial Action Task Force recommendations and regulations in several jurisdictions, including India. Restricting withdrawals, it fears, could push users towards unlicensed and decentralised platforms.It's time service providers have uniform guidelines on withdrawal limits, disclosures, user protection, and product-wise taxation, said Sudhakar Lakshmanaraja, founder, Digital South Trust.The split in the Indian crypto mart over withdrawals captures the regulatory twilight zone the trade finds itself in. According to Purushottam Anand, founder Crypto Legal, any regulation on withdrawals must strike a careful balance between mitigating misuse and preserving users' right to self-custody. "Imposing cumbersome withdrawal procedures or outright prohibition would compel users to rely entirely on exchange-based custody. Users in the US and elsewhere have repeatedly sought regulatory support for the right to self-custody," said Anand.