According to local reports, global cryptocurrency exchange Binance is set to re-enter the Indian market after agreeing to pay a $2 million penalty. This move is part of the exchange’s efforts to comply with India’s Financial Intelligence Unit (FIU) regulations and local laws on money laundering and taxation.
The re-entry of Binance into India signifies a major policy shift for the exchange, which will now operate as a fully compliant entity registered under the FIU. This decision aligns with the government’s firm stance that all global cryptocurrency exchanges must fully adhere to local laws to operate within the country.
Officials have commented on the matter, noting the importance of compliance for maintaining the integrity of India’s financial system and reducing vulnerabilities. One official was quoted as saying:
It is unfortunate that it took more than two years for [Binance] to realize that no global powerhouse can command special treatment, especially at the cost of exposing the country’s financial system to vulnerabilities.
However, the official did not confirm the $2 million penalty amount. Further, the overall breakdown of the fine also remains unknown.
Binance was previously banned in January when the Indian government blocked access to nine crypto platforms operating without adherence to local regulations. This was followed by popular app stores, namely those of Google and Apple, removing these platform’s availability in India.
In response to these actions, a spokesperson for Binance South Asia stated:
We remain committed to complying with local regulations and maintaining dialogue with regulators worldwide to ensure the continued availability of our services.
Historically, Binance dominated the Indian market, holding approximately 90% of the country’s crypto assets, valued at around $4 billion. This market share was largely due to the platform’s non-compliance with local tax requirements, specifically the avoidance of a 1% tax deducted at source on transactions, which other compliant exchanges were subject to.
Post-ban, a significant migration of crypto holdings from Binance to compliant Indian exchanges was observed, with platforms like CoinDCX and WazirX experiencing substantial growth. These Indian exchanges reported a 2,000% increase in inflows week-over-week after the government’s crackdown.
In related developments, KuCoin, another major cryptocurrency exchange based in Seychelles, became the first FIU-compliant foreign crypto exchange in India. KuCoin’s registration has been viewed as setting a precedent for a regulated and inclusive cryptocurrency landscape in India.
