After a conspicuous four-month absence due to compliance issues, Binance, the renowned cryptocurrency exchange platform, is preparing its grand return to India. This return is conditional on the payment of a $2 million fine imposed for non-compliance with local anti-money laundering (AML) regulations.
Background and implications for Binance
Binance, along with nine other foreign cryptocurrency platforms, were blocked in India earlier this year following compliance flaws. These exchanges had not adhered to the strict requirements of India’s Financial Intelligence Unit (FIU), resulting in their URLs and mobile apps being blocked.
Binance’s return is an important sign of compliance, as the platform has now agreed to abide by the rules, ending a period of uncertainty not only for itself but also for its many Indian users. Prior to the block, Binance accounted for over 90% of the country’s cryptocurrency trading volume. This market dominance shows the potential impact of its return on the local cryptocurrency ecosystem.
Changes and adaptations
To adapt to Indian regulations, Binance and other platforms such as KuCoin have begun applying a 1% withholding tax deduction, in line with new Indian tax policies. This change illustrates a broader commitment by foreign platforms to respect local regulatory frameworks and secure their presence on the Indian market.
Conclusion and outlook
Binance’s history in India has been marked by ups and downs, most notably with the controversial, then cancelled, acquisition of local exchange WazirX. However, Binance’s decision to pay the fine and comply fully with the FIU’s requirements shows a willingness to turn the page and rebuild a relationship of trust with the Indian market.
Binance’s re-entry raises important questions about the future of cryptocurrency exchanges in India and how they will adapt to increasingly stringent regulatory requirements. The return also marks a crucial moment for the cryptocurrency industry in the country, potentially paving the way for an era of increased regulation and participation.
