After being banned by India’s Financial Intelligence Unit (FIU) for four months, Binance is now looking to make a return to the Indian market.
According to two insider sources, the exchange is reportedly set to pay a $2 million penalty to the regulatory body for failing to adhere to certain rules. The sources did not provide details on the calculation method used to determine this amount.
According to a report by Chainalysis, India is among the fastest-growing crypto economies worldwide and has the highest adoption rate in 2023. Binance, by rejoining the Indian market, will be the second cryptocurrency exchange that complies with FIU regulations to enter this expanding market, following closely behind KuCoin.
Before being prohibited in January, Binance allegedly handled over 90% of cryptocurrency trades in India. The platform drew significant interest due to traders seeking ways around the Indian government’s new tax regulations.
Unregistered foreign cryptocurrency exchanges, estimated to cost India around INR 3000 crores (approximately USD 361.45 million) in annual tax revenue losses, have reportedly driven the Financial Intelligence Unit to prohibit their operation within the country.
A knowledgeable source commented regretfully that Binance seemed to have learned too late that there’s no chance for discussions, and no dominant player is exempted from following rules, potentially putting a nation’s financial infrastructure at risk.
During the process of signing up with FIU, Binance is now subject to the identical regulations as local cryptocurrency trading platforms. Among these rules is a 1% tax deduction at source (TDS), which has previously been enforced by KuCoin and other Indian crypto exchanges.
Nine foreign trading platforms were prohibited by the Financial Investigation Unit (FIU) from continuing business in the country. Among these, KuCoin and Binance have obeyed the regulators’ instructions. However, OKX, another well-known exchange on the list, has halted all operations in India. In an email to their clients, OKX stated that regulatory pressure was the reason for this action.
Sumit Gupta, CEO of CoinDCX, explained to crypto.news that these advancements are intended to help crypto exchanges adhere to regulations such as the Prevention of Money Laundering Act (PMLA). This will create a more regulated and compliant environment for the crypto industry.
He emphasized that paying close attention to regulatory requirements is essential for creating a durable crypto market in India.
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2024-04-18 15:26