- Binance is preparing to re-enter the Indian market.
- Binance was banned in India earlier this year.
- The exchange will pay penalties worth $2 million and promises to be a fully-compliant entity.
After being banned earlier this year, Binance, the world’s largest cryptocurrency exchange, is preparing to re-enter the Indian market by paying a substantial penalty of around $2 million.
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According to a report, the exchange plans to return as a registered entity under the oversight of India’s Financial Intelligence Unit (FIU), ensuring strict compliance with all relevant laws, including the virtual digital assets (VDA) taxation framework and the Prevention of Money Laundering Act (PMLA). This move signifies a significant shift from its previous approach, described as “sloppily flouting” regulations.
Indian officials reiterated that the country’s position has always been clear to global cryptocurrency exchanges: adherence to all laws is necessary to continue operating in India’s regulatory environment. No global powerhouse can expect special treatment at the expense of India’s financial system’s integrity.
Although the exact penalty amount of $2 million remains unconfirmed, Binance’s commitment to re-entering India responsibly is evident. Queries directed to Binance regarding these developments remained unanswered as of press time on Wednesday.
Binance’s significance in the crypto market is undeniable, being the largest exchange in terms of both asset holdings and daily trade volume. According to CoinMarketCap data, it accounted for 25% of the global trade volume, with a daily trade volume reaching upwards of $20 billion.
Before its ban, Binance held a dominant position in India’s crypto landscape, representing nearly 90% of the estimated $4 billion crypto holdings of Indian nationals. Its market dominance was attributed partly to non-compliance with tax laws, enabling investors to trade without paying the 1% tax deducted at source (TDS) applicable on registered exchanges.
Manhar Garegrat, India head at Liminal, a crypto custody solutions provider, views Binance’s return as a positive development that will bring maturity to the crypto industry in India. He notes the importance of exchanges operating on a level playing field regarding tax compliance, signaling a shift in user acquisition and retention strategies.
Following Binance’s ban, a significant portion of Indian crypto investors migrated to domestic exchanges like CoinDCX and WazirX, leading to substantial inflows. However, the absence of registered entities resulted in considerable tax leakage, estimated at nearly Rs 3,000 crore annually, according to research by Esya Centre.
Binance’s decision to operate as a fully compliant entity represents a significant turnaround. Industry executives see this as a win for Indian laws and financial monitoring systems, emphasizing the importance of reporting to law enforcement agencies.
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Binance’s re-entry could reshape market dynamics in India, bringing advanced technology and greater liquidity compared to local exchanges. It comes at a time when major cryptocurrencies like Bitcoin and Ethereum are reaching new highs, signaling a growing interest in the crypto market.
With financial regulators in various countries approving crypto-backed securities for traditional markets, Binance plans to offer localized payment solutions, establish a dedicated India team, and invest in the country’s blockchain ecosystem, indicating a long-term commitment to the Indian market.
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