Violet Vallaya
Binance, the world’s largest cryptocurrency exchange, is making a significant move to re-enter the Indian market after a four-month ban.
The exchange has agreed to pay a $2 million penalty for non-compliance with local regulations, according to reports from Indian media on Thursday. This marks a major step towards resolving the exchange’s regulatory issues in India and signals a renewed interest in the country’s burgeoning crypto market.
Earlier this year, Binance was among nine offshore cryptocurrency platforms banned from operating in India due to non-compliance with the Financial Intelligence Unit (FIU) and Prevention of Money Laundering Act (PMLA) guidelines. The exchange, which previously accounted for over 90% of Indian crypto trading volume, faced restrictions as it was not registered with the FIU.
Efforts Towards Compliance
Binance has since taken significant steps to rectify its position in India. By registering with the FIU, Binance aligns itself with India’s financial regulatory standards. This move follows the Indian Ministry of Finance’s decision to block access to Binance’s websites and mobile apps in January, alongside other foreign crypto exchanges, for failing to meet regulatory requirements.
Regulatory and Tax Implications
The Indian government had implemented a strict regulatory regime, including stringent tax regulations, which led many Indian users to turn to foreign crypto exchanges such as Binance. However, the recent ban forced Binance and other overseas exchanges to seek registration with the FIU and comply with Indian laws.
One such requirement is the implementation of a 1% tax deduction at source (TDS), as already practiced by another overseas exchange, KuCoin. Other foreign exchanges planning to enter the Indian market will also have to adhere to these regulations.
After the news broke out that Binance is set to return to India, reactions have been pouring in on Twitter from users and industry experts alike.
Indian investor Aakash Yadav said, “Binance is back in India! After settling a $2M fine, the world’s largest crypto exchange is ready to re-enter the Indian market, now fully FIU-compliant. A big win for India’s crypto community, signaling a new era of regulatory cooperation.”
Another user, who had a different take on the matter, wrote on X: “#Binance returning to India, good news for investors and traders, bad news for Indian exchanges.”
Binance’s Presence in India
Binance has had a significant presence in India since its reported acquisition of local crypto exchange WazirX in 2019. However, Binance later clarified that the deal did not materialize. Instead, Binance provided wallet services for WazirX, while the local exchange handled user sign-ups, KYC, trading, and withdrawals.
Binance’s compliance efforts could pave the way for its continued success and growth in India’s crypto space, but its journey will be closely watched as the exchange resumes operations in the country.
