Binance Prepares for Return to India After Paying $2M Fine

by BSC News

April 17, 2024


The exchange was initially banned in January for not adhering to the Financial Intelligence Unit (FIU) guidelines and the Prevention of Money Laundering Act (PMLA).

Binance, the world's leading cryptocurrency exchange by volume, is set to make a significant return to the Indian market after resolving regulatory issues and paying a reported $2 million penalty, according to The Economic Times.


This decision comes after the exchange faced a ban in January for not adhering to local financial regulations, specifically the Financial Intelligence Unit (FIU) guidelines and the Prevention of Money Laundering Act (PMLA). Binance's reinstatement follows its registration with the FIU, a crucial step that places it under the scrutiny of Indian financial regulators overseeing virtual digital assets (VDA).


In its bid to resume operations, Binance has committed to fully comply with the PMLA and the VDA taxation framework. 


Previously, the platform was criticized for its casual approach to these regulations, which purportedly led to significant tax leakage and ultimately contributed to its initial ban. As per reports, the platform’s previous non-compliance with the 1% tax deducted at source (TDS) on registered exchanges had given it an undue advantage over competitors.


The adherence to these laws is a strategic move by Binance to restore its credibility and operational freedom within India.

Market Impact and Challenges

Prior to its ban, Binance was a dominant force in India's crypto market, holding nearly 90% of the estimated $ 4 billion in crypto assets owned by Indian nationals. 


Its absence led to a dramatic shift in the market landscape, with Indian investors moving their holdings to local exchanges like CoinDCX and WazirX, which reported a surge in inflows by up to 2,000% week-on-week. 


The return of Binance is expected to reintroduce competitive dynamics in the market, especially among Indian exchanges that benefited from its absence. 


Following Kucoin's registration last month, Binance's move could prompt more offshore exchanges to seek compliance, potentially leading to a more regulated and stable cryptocurrency environment in India.


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