As a long-term crypto investor with a deep understanding of the Indian market, I find the recent penalty imposed on Binance by the Financial Intelligence Unit of India (FIU-IND) a concerning development. I’ve seen firsthand how Binance dominated the Indian market before its ban due to non-compliance with tax laws. The $2.2 million penalty is the highest ever imposed on any crypto entity in India, and it serves as a clear warning that regulatory pressure is increasing in the crypto space.
The Financial Intelligence Unit of India (FIU-IND) has imposed a historic fine of approximately 165 crores Indian Rupees on the international cryptocurrency platform, Binance.
The record-breaking penalty against Binance is a result of their breach of India’s anti-money laundering (AML) rules.
In December 2023, the Finance Ministry’s intelligence unit issued warning notices to nine international trading platforms, including Binance, for allegedly breaking Indian laws by carrying out operations within the country.
Based on a thorough review of Binance’s answers and the documents submitted to the Financial Intelligence Unit-India (FIU-IND), the regulatory body concluded that the allegations were valid and imposed a significant fine on Binance on June 19, 2024.
Binance, previously the leading cryptocurrency exchange in India before being declared illegal by the government in January, aims to make a comeback by reportedly paying a fine amounting to approximately $2 million. Prior to the ban, Binance held an estimated 90% of India’s $4 billion crypto asset market.
The staggering $11 billion trading volume recorded by Binance within the last 24 hours, as reported by CoinMarketCap, underscores its prominent position in the global cryptocurrency market. Notably, Binance’s significant influence in India originated from non-compliance with tax regulations, enabling traders to circumvent the mandatory 1% Tax Deduction at Source (TDS) on registered exchanges.
As an analyst, I’ve noticed that even though the FIU-IND has been operating as a VDA registrar within the established legal frameworks, the Income Tax Department has kept a close eye on tax-related matters. This ongoing review may impact investors who conducted unauthorized trades on the platform during the previous two years.
The penalty levied against Binance underscores growing scrutiny from regulators towards crypto exchanges and emphasizes the importance of compliance with Anti-Money Laundering (AML) regulations and tax laws by these platforms and their users.
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2024-06-20 11:16