May 22, 2024
Binance Set to Re-Enter Indian Market After Paying $2 Million Fine
Policy & Regulation

Binance Set to Re-Enter Indian Market After Paying $2 Million Fine

Binance is set to make a comeback in India after a four-month ban.

The exchange will pay a $2 million fine for non-compliance with India’s Anti-Money Laundering Act, according to a report published in The Economic Times.

Binance’s Ban and Return

The Indian Ministry of Finance’s Financial Intelligence Unit (FIU) blocked access to nine foreign crypto exchanges, including Binance, in the first week of January for non-compliance with the country’s Anti-Money Laundering Act.

Binance’s ban significantly impacted Indian crypto trading, as the exchange accounted for over 90% of the country’s crypto trading volume before its ban earlier this year.

With Binance’s return to India, the exchange has registered with the FIU and must adhere to the same rules and regulations as Indian exchanges.

The move comes as part of Binance’s effort to comply with Indian regulations and regain access to the market.

Regulatory Changes and Compliance

Indian users turned to foreign crypto exchanges like Binance to bypass severe tax impositions, prompting the government to ban overseas exchanges not registered with the FIU.

Now that Binance is registered with the FIU, it will need to comply with India’s rules and regulations, including a 1% tax deduction at source (TDS), as other foreign crypto exchanges must also do.

A source familiar with the situation told The Economic Times that it is “unfortunate that it took [Binance] more than two years to realize there is no room for negotiations, and [that] no global powerhouse can command special treatment, especially at the cost of exposing the country’s financial system to vulnerabilities.”

Binance’s History in India

Binance’s history in India dates back to its reported acquisition of the local crypto exchange WazirX in 2019. However, Binance later claimed the deal never went through and that it only provided wallet services for WazirX as a tech solution.

WazirX remained responsible for all other aspects of the exchange, including user sign-up, Know Your Customer (KYC) procedures, trading, and initiating withdrawals.

While Binance has chosen to become an FIU-registered entity in India, other foreign crypto exchanges have taken different paths.

KuCoin has also registered with the FIU and implemented the 1% TDS, while OKX, another major crypto exchange among the nine blocked exchanges, shut down its operations in India, citing the regulatory burden.

Binance’s return to the Indian market marks a significant development in the country’s crypto industry. As the exchange complies with India’s regulations, it sets an example for other foreign crypto exchanges looking to re-enter the market.

Binance’s actions could influence the future of crypto trading in India, as the government continues to regulate the industry.

Image: Wallpaper Flare

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