April 22, 2024
By Anjali Kochhar
Binance, the world’s leading cryptocurrency exchange, is gearing up to make a comeback in India after being banned earlier this year. Sources familiar with the matter revealed to ET that Binance is prepared to pay a penalty of approximately $2 million to re-enter the Indian market. The exchange will return as an entity registered with the Financial Intelligence Unit (FIU) of the finance ministry, committing to adhere to all relevant laws, including the Prevention of Money Laundering Act (PMLA) and the virtual digital asset (VDA) taxation framework.
The decision to allow Binance back into India underscores the country’s commitment to enforcing regulatory compliance within its burgeoning cryptocurrency market. Officials have made it clear that all global cryptocurrency exchanges must adhere to Indian laws, including the Prevention of Money Laundering Act (PMLA) and the virtual digital asset (VDA) taxation framework, to operate within the country’s financial system.
Binance’s return to India is significant, considering its previous dominance in the market, where it accounted for nearly 90% of the estimated $4 billion cryptocurrency holdings of Indian nationals. However, its non-compliance with tax laws, particularly the failure to implement the 1% tax deducted at source (TDS) applicable on registered exchanges, led to its ban earlier this year.
With Binance’s return, the crypto industry anticipates a level playing field where tax evasion is no longer tolerated. Indian exchanges such as CoinDCX and WazirX experienced significant inflows after Binance’s ban, reflecting a shift in investor behaviour towards compliant platforms.
Binance’s decision to operate as a fully compliant entity marks a pivotal moment for the cryptocurrency industry in India. By committing to comply with Indian laws and regulations, Binance is not only ensuring its own legitimacy but also contributing to the overall stability and security of the Indian cryptocurrency market.
The re-entry of Binance into India is expected to have far-reaching implications for market dynamics. With its superior technology and larger liquidity compared to Indian exchanges, Binance is poised to reshape the cryptocurrency landscape in the country. Additionally, its return comes at a time when popular cryptocurrencies like bitcoin and ethereum are experiencing record-breaking highs, further fueling excitement and anticipation among investors.
As part of its re-entry strategy, Binance plans to offer localised payment solutions, establish a dedicated team in India, and invest further in the country’s blockchain ecosystem. This demonstrates Binance’s commitment to fostering innovation and growth within the Indian cryptocurrency market while ensuring regulatory compliance and security.
The decision to allow Binance back into India also sets a precedent for other global cryptocurrency exchanges. It sends a clear message that compliance with Indian laws is non-negotiable and that any exchange seeking to operate within the country must adhere to regulatory requirements.
Binance’s return to India has been met with cautious optimism within the cryptocurrency community. While many view it as a positive development that will bring maturity and legitimacy to the industry, others remain wary of the challenges and complexities that lie ahead.
Nevertheless, Binance’s re-entry into India marks a significant milestone for the cryptocurrency ecosystem in the country. It signals a new era of collaboration between global exchanges and Indian regulators, paving the way for a more inclusive, secure, and regulated cryptocurrency landscape in India.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
