After facing a ban by the Indian government earlier this year, Binance, the world's largest cryptocurrency exchange, is poised to make a comeback in India by adhering to regulatory requirements and paying a penalty of approximately $2 million, according to sources familiar with the matter.
The exchange intends to reestablish its presence in India as an entity registered with the Financial Intelligence Unit (FIU) of the finance ministry, signaling a commitment to compliance with Indian laws governing virtual digital assets (VDA), including the Prevention of Money Laundering Act (PMLA) and VDA taxation framework.
India's stance on cryptocurrency exchanges has been clear – comply with all laws to continue operations within the country. Binance's decision to reenter the Indian market as a fully compliant entity underscores the importance of adhering to regulatory guidelines and upholding the integrity of the financial system.
Before its ban, Binance accounted for a significant portion of India's crypto holdings, mainly due to its non-compliance with tax laws, allowing investors to trade without paying the applicable 1% tax deducted at source (TDS). With Binance's return, the crypto industry in India is expected to witness increased maturity, with global companies investing in the country.
Following the ban, Indian crypto investors migrated their holdings to local exchanges such as CoinDCX and WazirX, resulting in substantial inflows. However, the absence of offshore exchanges like Binance led to significant tax leakage estimated at nearly Rs 3,000 crore annually.
Binance's decision to operate as a fully-compliant entity marks a significant shift in its approach and is seen as a positive development by industry executives. The exchange's reentry into the Indian market could disrupt market dynamics, given its superior technology and larger liquidity compared to local exchanges.
Binance's return comes at a time when popular cryptocurrencies like Bitcoin and Ethereum are reaching all-time highs. The exchange plans to offer localized payment solutions, establish a dedicated India team, and invest further in the country's blockchain ecosystem.
As Binance prepares to resume operations in India, its compliance with regulatory requirements sets a precedent for a more inclusive, secure, and regulated cryptocurrency landscape in the country.
