Binance, one of the largest cryptocurrency exchanges in the world, is getting ready to return to India after the country’s Financial Intelligence Unit (FIU) banned it for four months. According to people who know about the situation, Binance has agreed to pay the regulator a $2 million fine for not following the rules. However, the exact amount of the fine has not been released.
A Chainalysis study says that as of 2023, India has the highest adoption rate. This is because it has one of the fastest-growing crypto economies. When Binance comes back to the Indian market, it will be the second foreign cryptocurrency exchange that the FIU approves. KuCoin was the first.
Before the ban in January, it was said that over 90% of all crypto trade in India happened on Binance. It became more common as traders tried to figure out how to deal with the Indian government’s tax rules.
Unregistered foreign trades cost India 3000 crores (about USD 361.45 million) in lost taxes yearly. Because of this significant loss, the FIU cracked down on foreign exchanges working in the country without being registered.
Binance Faces Criticism Over Delayed Compliance Realization
Those who know about the situation were disappointed, saying, “It’s disappointing that it took (Binance) more than two years to realize there is no room for negotiation and that no global powerhouse can demand special treatment, especially if it means putting the country’s financial system at risk.”
As part of the FIU registration process, Binance will now have to follow the same rules as other coin exchanges in the country. One is a 1% tax deduction at source (TDS), which KuCoin and some Indian crypto companies have already implemented.
The FIU had already told nine foreign exchanges they couldn’t do business in India. KuCoin and Binance have followed the rules set by regulators. However, OKX, another well-known exchange on the list, has stopped doing business in India, telling its users in an email that the main reason was the burden of regulations.
Sumit Gupta, CEO of CoinDCX, discussed the importance of following the rules. He said, “These changes are meant to ensure that crypto exchanges follow rules like the Prevention of Money Laundering Act (PMLA), laying the groundwork for a more compliant ecosystem.” He also said that focusing on regulatory compliance would be very important for making India a safe place for crypto.
