Cryptocurrency titan Binance, embroiled in a ban by India’s central government since January, is making strides to re-enter the Indian market. Sources familiar with the situation revealed to ET that Binance is in the process of registering with the Financial Intelligence Unit (FIU) and is prepared to pay a hefty penalty of up to $2 million. This move signals a significant shift in strategy as Binance seeks to align with Indian regulatory requirements, including adherence to the Prevention of Money Laundering Act (PMLA) and Value-Added Taxation (VDA), which it had previously disregarded.
Speaking on the condition of anonymity, an individual involved in the matter stated that Binance will uphold all applicable laws and regulations, marking a departure from its previous lax approach. The official emphasized that India’s stance on cryptocurrency exchanges has always been clear – full compliance with the law is non-negotiable. They remarked on the unfortunate delay it took for Binance to recognize this imperative, stressing that no global powerhouse should expect special treatment that compromises the integrity of India’s financial system.
While the official did not confirm the exact amount of the penalty or the methodology used to calculate it, the proposed $2 million penalty reflects the seriousness of the breach and the effort required for Binance to regain trust and operate within India’s legal framework. Prior to its ban, Binance commanded a staggering 90% share of the estimated $4 billion cryptocurrency holdings held by Indian nationals. This dominance was partly due to its non-compliance with tax laws, allowing investors to trade without paying the 1% Tax Deducted at Source (TDS) mandated for registered exchanges.
Binance’s decision to register with the FIU and commit to compliance signifies a significant step towards rebuilding its reputation and re-establishing itself in the Indian crypto market. Notably, Binance will become the second offshore exchange to formalize its presence in India following Seychelles-based Kucoin, which recently announced its FIU compliance, leading to the lifting of the ban on its platform.
In addition to regulatory compliance, Binance plans to enhance its Indian operations by offering localized payment solutions, establishing a dedicated team in India, and increasing investments in the country’s blockchain ecosystem. These initiatives underscore Binance’s commitment to fostering a transparent and legally compliant crypto environment in India while leveraging the nation’s burgeoning interest in blockchain technology and digital assets.
