Key takeaways;
- Binance will be allowed to re-enter India following a four-month ban, provided it pays a $2 million fine for non-compliance.
- Prior to its prohibition in January of this year, Binance was purportedly responsible for over 90% of the cryptocurrency trading volume in India.
The Economic Times stated that after a four-month ban, Binance, a cryptocurrency exchange, will be permitted to re-enter India as long as it pays a $2 million fine for violation.
After KuCoin, Binance will be the second international exchange to return to India after the country’s finance body blocked access to cryptocurrency exchanges for non-compliance.
In the first week of January, the Indian Ministry of Finance’s Financial Intelligence Unit (FIU) blocked access to the mobile applications and URLs of nine foreign cryptocurrency exchanges, including Binance, due to non-compliance with the Anti-Money Laundering Act.
Over 90% of India’s crypto trading volume was reportedly conducted on Binance until it was banned in January of this year.
In order to avoid the harsh tax penalties, Indian customers rushed to foreign cryptocurrency exchanges like Binance, which led the government to outlaw foreign exchanges that were not FIU-registered.
Foreign cryptocurrency exchanges like Binance must now follow the same laws and guidelines as Indian exchanges after registering with the FBI.
Other foreign cryptocurrency exchanges hoping to make an entry into India will need to do the same as KuCoin, which has initiated a 1% tax deduction at source (TDS). According to an informed source who spoke with The Economic Times:
“unfortunate that it took (Binance) more than two years to realize there is no room for negotiations, and (that) no global powerhouse can command special treatment, especially at the cost of exposing the country’s financial system to vulnerabilities,”
In India, Binance has a lengthy history. Though it later claimed the agreement never materialized, it was thought to have bought the local cryptocurrency exchange WazirX in 2019.
It was said by Binance that WazirX was in charge of all other parts of the exchange, such as user registration, Know Your Customer (KYC), trading, and requesting withdrawals, and that Binance merely offered WazirX wallet services as a technological solution.
As KuCoin and Binance have chosen to register as Foreign Exchange Units (FIUs) in India, OKX, one of the top nine cryptocurrency exchanges that have been prohibited, has ceased operations entirely due to regulatory burdens.
