Binance Eyes Comeback to India After FIU Ban: Will Pay $2 Million Penalty

Binance, one of the world’s largest cryptocurrency exchanges, is making a comeback to India after a four-month ban imposed by the nation’s Financial Intelligence Unit (FIU). The exchange has reportedly agreed to pay a $2 million penalty for non-compliance, although the exact calculation of the fine remains undisclosed.

India has emerged as one of the fastest-growing crypto economies, with the highest adoption rate in 2023, according to a Chainalysis report. With its re-entry into the market, Binance will become the second FIU-compliant foreign cryptocurrency exchange in India, following closely behind KuCoin.

Before the ban in January, Binance held a significant share of the Indian crypto trading volume, accounting for over 90% of the market. The surge in popularity was driven by traders seeking to circumvent tax regulations imposed by the Indian government.

Foreign cryptocurrency exchanges not registered in India were reportedly causing an annual tax leakage of approximately USD 361.45 million. This prompted the FIU to ban unregistered foreign exchanges in the country.

As part of the FIU registration, Binance will now be subject to the same regulations as local cryptocurrency exchanges, including a 1% tax deduction at source (TDS). KuCoin and other Indian exchanges have already implemented this tax deduction.

While Binance and KuCoin have complied with the regulators, another prominent exchange, OKX, has ceased operations in India due to regulatory burdens. Sumit Gupta, CEO of CoinDCX, emphasized the importance of regulatory compliance in building a sustainable crypto environment in India.

The developments in the cryptocurrency market in India aim to ensure that exchanges operate in compliance with regulations like the Prevention of Money Laundering Act (PMLA), laying the foundation for a more compliant ecosystem. Stay tuned for more updates on Binance’s comeback to the Indian market.