Binance Considers Return to Indian Market with $2 Million Penalty: Report

Binance Eyes Return to Indian Market with $2 Million Penalty

After being banned in late 2023, cryptocurrency exchange Binance is reportedly considering a comeback to India’s market. According to a report by the Economic Times, the platform’s potential re-entry is contingent on paying a penalty of around $2 million.

The key factor in Binance’s prospective return is its registration with the Financial Intelligence Unit (FIU) of India’s finance ministry, which oversees virtual asset commerce. The exchange aims to comply with relevant legislation, including the Prevention of Money Laundering Act (PMLA) and the crypto taxation framework, after previously failing to adhere to these regulations.

While physical presence in India is not mandatory, all virtual asset service providers (VASPs) must comply with Indian regulations, as clarified by the Ministry of Finance. This includes meeting reporting, record-keeping, and other obligations outlined in the PMLA.

India has been actively integrating the crypto sector into its financial system, with regulations introduced last March requiring Know Your Customer (KYC) data collection from crypto companies. VASPs with Indian operations, regardless of their location, must register as reporting entities with the FIU and follow the PMLA.

Prime Minister Narendra Modi has advocated for global regulations governing cryptocurrencies, emphasizing India’s commitment to regulatory clarity in the crypto space.

Before its ban, Binance held a dominant market share in India, accounting for nearly 90% of the estimated $4 billion in cryptocurrency holdings among Indian citizens. Its popularity was due to non-compliance with Indian tax regulations, as it allowed trading without the 1% tax deducted at source (TDS) imposed by registered exchanges. The introduction of the TDS led to a significant migration of users to offshore crypto exchanges, including Binance.

As Binance contemplates its return to India’s market, the crypto community awaits further developments on the potential re-entry and the impact it may have on the country’s crypto landscape.