Binance Back in India After FIU Registration And $2M Penalty

Binance, the global cryptocurrency giant, is set to re-enter the Indian market following a ban earlier this year.

In a bid to return to the Indian market, Binance will pay a substantial $2 million fine, affirming its commitment to adhere to Indian regulations.

The exchange aims to operate as an entity registered with the Financial Intelligence Unit (FIU) under the finance ministry, demonstrating its dedication to compliance with Indian laws and regulations.

This decision highlights Binance's acknowledgment of the significance of regulatory conformity within the Indian cryptocurrency landscape, particularly considering the country's strict regulatory framework, which includes the Prevention of Money Laundering Act (PMLA) and the Virtual Digital Assets (VDA) taxation structure.

Failure to Comply With Tax Laws and Regulations

Before the ban, Binance held a dominant position in the Indian cryptocurrency market, controlling almost 90% of the country's estimated $4-billion crypto holdings.

However, the exchange's failure to comply with tax laws enabled investors to trade without paying the required 1% tax deducted at source (TDS) applicable to registered exchanges.

The ban prompted a notable shift in the behavior of Indian crypto investors, who transferred their holdings to local exchanges like CoinDCX and WazirX. This transition resulted in significant inflows for these platforms.

Furthermore, research suggests that global crypto exchanges operating without a registered entity in India contributed to considerable tax evasion, estimated at nearly Rs 3,000 crore annually.

Impact on The Crypto Market

Binance's decision to adhere to Indian laws and regulations marks a significant strategic pivot and is widely seen as a favorable development for the crypto industry in India.

Analysts anticipate that Binance's re-entry into the Indian market could have significant implications for market dynamics, given the exchange's advanced technology and greater liquidity compared to domestic exchanges.

Additionally, Binance has outlined ambitious plans for its renewed presence in India, including the introduction of localized payment solutions, the formation of a dedicated India team, and further investments in the country's blockchain ecosystem.

This strategy aligns with broader global trends, as financial regulators in countries such as the US, the UK, and Hong Kong increasingly embrace cryptocurrencies and approve crypto-backed securities for trading in traditional financial markets.