Binance is set to re-enter the Indian financial market after a four-month hiatus, during which it temporarily suspended its operations in the country. According to the Economies Times, a local media, the exchange will pay a $2 million fine for noncompliance with local laws before resuming its activities.
In January 2024, India’s Financial Intelligence Unit (FIU) blocked access to nine foreign crypto exchanges, including Binance, citing their failure to adhere to the country’s Anti-Money Laundering regulations.
Before its ban, Binance dominated the Indian crypto exchange scene; it held 90% market share of the country’s $4 billion total market.One of the major reasons behind the popularity of the platform was its flexible tax compliance policy. It allowed traders to be exempted from the mandatory 1% TDS (tax deduction at source) charges on registered exchanges. This policy seems to have played a crucial role in the platform being banned by the authorities.
However, following the ban, Binance publicly declared its commitment to comply with all relevant laws in India, including the Prevention of Money Laundering Act (PMLA) and the VDA taxation framework. However, it noted that implementing the structures required to comply with the nation’s regulations would take time.
The Indian government has been championing the cause for a regulated cryptocurrency sector, and it has consistently maintained that global cryptocurrency exchanges must adhere to all regulations to operate in the country.
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A government official familiar with the matter lamented to The Economic Times, stating,
“It is unfortunate that it took (Binance) more than two years to realize there is no room for negotiations, and no global powerhouse can command special treatment, especially at the cost of exposing the country’s financial system to vulnerabilities.”
With this move, Binance became the second, following KuCoin, out of the banned crypto exchanges to become a registered entity with the Financial Intelligence Unit to facilitate its return to the Indian market. Notably, KuCoin implemented a 1 percent TDS rate for transactions involving Indians on its platform in compliance with the country’s rules.
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