Binance Set to Re-Enter India with $2M Fine: Report

Binance, the world’s leading cryptocurrency exchange, is poised to make a comeback in the Indian market after a four-month absence. Following a ban earlier this year due to non-compliance with local regulations, Binance is planning to pay a $2 million fine as part of its re-entry strategy, according to a report published in The Economic Times.

The ban, imposed by India’s Financial Intelligence Unit (FIU), targeted Binance and nine other foreign crypto exchanges for failing to adhere to the country’s Anti-Money Laundering (AML) regulations. This move disrupted the operations of these exchanges and prompted them to seek compliance with Indian laws to resume their services.

Before the ban, Binance held a dominant position in India’s cryptocurrency landscape, commanding over 90% of the country’s estimated $4 billion crypto holdings. However, its non-compliance with tax laws allowed investors to trade without paying the 1% tax deducted at source (TDS), applicable on registered exchanges.

In response to the ban, Indian crypto investors shifted their holdings to local exchanges like CoinDCX and WazirX, resulting in significant inflows for these platforms. Additionally, research indicates that global crypto exchanges operating without a registered entity in India led to substantial tax leakage, estimated at nearly Rs 3,000 crore annually.

Binance’s decision to comply with Indian laws and regulations signals a positive development for the crypto industry in India. By planning to operate as an entity registered with the FIU, Binance demonstrates its commitment to adhering to Indian laws, including the Prevention of Money Laundering Act (PMLA) and the Virtual Digital Assets (VDA) taxation framework.

Observers anticipate that Binance’s re-entry could have profound implications for market dynamics, given its advanced technology and larger liquidity compared to domestic exchanges. Moreover, Binance has ambitious plans for its renewed presence in India, including the introduction of localized payment solutions, establishing a dedicated India team, and making further investments in the country’s blockchain ecosystem.

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