Binance eyes return to India as an FIU-compliant platform

Binance is eyeing a comeback to India following a 4-month ban placed on the exchange by the nation’s Financial Intelligence Unit (FIU).

Two sources familiar with the development claim that the exchange has agreed to pay a $2 million penalty to the regulator for non-compliance. However, they did not confirm how the fine has been calculated.

India, according to a Chainalysis report, is one of the fastest-growing crypto economies, with the highest adoption rate as of 2023. With its re-entry, Binance will become the second FIU-compliant foreign cryptocurrency exchange to tap into this market, closely following KuCoin.

Prior to being banned in January, Binance reportedly accounted for more than 90% of the Indian crypto trading volume. The surge in popularity was primarily driven by traders trying to bypass tax implications imposed by the Indian government.

Global cryptocurrency exchanges not registered in India were reportedly causing INR 3000 crores (approx. USD 361.45 million) in tax leakage annually. This was one of the key motivators for the FIU to ban unregistered foreign exchanges in the nation.

One of the sources familiar with the matter was quoted saying that it is “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.”

As part of the FIU registration, Binance will now be bound to the same rules as the local cryptocurrency exchanges. This includes a 1% tax deduction at source (TDS), which has already been implemented by KuCoin along with the Indian crypto exchanges.

The FIU had banned nine foreign exchanges from the nation. While KuCoin and Binance have complied with the regulators, OKX, another prominent exchange on the list, has ceased all operations in India. In an email to its customers, the platform cited regulatory burden as the cause.

“These developments aim to ensure that crypto exchanges operate in compliance with regulations like the Prevention of Money Laundering Act (PMLA), laying the groundwork for a more compliant ecosystem,” Sumit Gupta, CEO of CoinDCX, told crypto.news in a statement. 

He added that the “focus on regulatory compliance” will play a key role in building a sustainable crypto environment in India.