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Journalist
Hassan Shittu
Journalist
Hassan Shittu
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Binance, the world’s largest cryptocurrency exchange, has partially returned to the Indian market. Its website was unblocked after it paid a hefty $2.25 million fine.
While this marks a significant step forward, not all of Binance’s services are fully operational yet.
The exchange’s re-entry into India is part of a broader effort to comply with local regulations, a crucial move for a platform that once dominated the Indian crypto landscape.
Binance Reopens Operations in India
Binance’s re-entry into the Indian market comes after a series of regulatory challenges that began with its ban in late 2023.
The Indian Financial Intelligence Unit (FIU) imposed a record fine of 188.2 million rupees ($2.25 million) on Binance for failing to adhere to the country’s stringent anti-money laundering (AML) regulations.
This penalty, the largest ever levied on a crypto entity in India, indicates the seriousness with which Indian authorities are approaching compliance in the cryptocurrency sector.
After receiving show-cause notices from the FIU, Binance registered with the agency in May 2024, paving the way for the unblocking of its website.
This registration was a critical step, as Indian regulations require all Virtual Digital Asset Service Providers (VASPs) to be registered with the FIU and comply with AML rules.
The exchange’s return, however, is not yet complete, as certain services remain restricted.
Specifically, while spot and futures trading have resumed, peer-to-peer (P2P) cash transactions—a popular feature in India—are still unavailable.
Before its regulatory troubles, Binance had a commanding presence in the Indian crypto market, controlling nearly 90% of the estimated $4 billion cryptocurrency holdings among Indian citizens.
This dominance was largely due to Binance’s previous non-compliance with Indian tax regulations, particularly the 1% tax deducted at source (TDS) that registered exchanges were required to levy on transactions.
The introduction of this tax led many Indian users to migrate to offshore platforms like Binance, which initially operated outside the purview of Indian financial laws.
The decision to re-enter the Indian market signals Binance’s intent to align with local regulations, including the Prevention of Money Laundering Act (PMLA) and the previously neglected crypto taxation laws.
With Binance’s website now unblocked, Indian traders have regained access to one of the largest and most diverse cryptocurrency platforms globally.
However, the absence of certain services like P2P cash transactions indicates that the platform is still navigating its full regulatory obligations.
Binance’s Operation in India: Regulatory Obstacles
Binance’s journey in India has been tumultuous, marked by local and global regulatory scrutiny.
The exchange’s operations were halted in India after failing to comply with AML regulations, leading to a comprehensive crackdown by the FIU.
This crackdown was not isolated to Binance alone; earlier in the year, KuCoin, another prominent crypto exchange, was fined 3.45 million rupees for similar AML violations.
Following this ban, Binance made the decision to discontinue cash payments for P2P trades in India to comply with the country’s regulations.
Before its ban, Binance’s non-compliance with local tax regulations, particularly the TDS, had allowed it to dominate the Indian market.
However, this dominance came at a cost, leading to significant regulatory pushback, resulting in the exchange’s temporary exit from the country.
The fine paid by Binance and subsequent registration with the FIU marks a new chapter in its relationship with Indian regulators.
While the exchange’s website has been unblocked, its full return to the Indian market is contingent on its ability to fully comply with all local regulations, including those governing P2P transactions.
