Binance Considers Re-Entering India’s Market, Faces $2m Penalty
Binance Considers Re-Entering Indian Market with $2m Penalty
In a surprising turn of events, cryptocurrency exchange Binance is contemplating a return to the Indian market after being banned in late 2023. According to a report by the Economic Times, Binance would have to pay a penalty of approximately $2 million to re-enter the market.
The platform’s potential comeback hinges on its registration with the finance ministry’s Financial Intelligence Unit (FIU), which oversees virtual asset commerce. A source revealed that Binance is committed to complying with all relevant laws, including the Prevention of Money Laundering Act (PMLA) and the crypto taxation framework, which it had previously neglected.
Despite multiple attempts to reach out to Binance for comment, the platform did not respond by press time, leaving the confirmation of the $2 million penalty amount uncertain.
The FIU had previously recommended blocking access to the web addresses of nine crypto exchanges, including Binance, in December. However, the Ministry of Finance clarified that physical presence in India is not required for registration and compliance, as the regulations apply to all entities engaged in virtual asset transactions.
India has been actively integrating the crypto sector into its financial system, with regulations introduced last year mandating Know Your Customer (KYC) data collection from crypto companies. All Virtual Asset Service Providers (VASPs) operating in India, whether onshore or offshore, must register with the FIU and adhere to the PMLA.
Before its ban, Binance reportedly dominated India’s crypto market, holding nearly 90% of the estimated $4 billion in cryptocurrency holdings among Indian citizens. This dominance was attributed to Binance’s non-compliance with Indian tax regulations, as it did not impose a 1% tax deducted at source (TDS) on transactions like registered exchanges did.
The introduction of the 1% TDS on cryptocurrency trading in India led to a mass exodus of users to offshore exchanges, including Binance. Prime Minister Narendra Modi has also advocated for global regulations governing cryptocurrencies, emphasizing the need for a comprehensive regulatory framework.
As Binance contemplates its return to the Indian market, the crypto community eagerly awaits further developments on this front.
