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Binance To Re-Enter India As FIU-Registered Exchange After $2M Penalt – Crypto News

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1 year ago

April 18, 2024

Dripp

After being banned by the Indian government earlier this year, Binance, the world’s largest cryptocurrency exchange, is preparing to re-enter the Indian market. Sources familiar with the matter indicate that Binance will pay a penalty of approximately $2 million as part of its re-entry strategy. The exchange intends to operate as an entity registered with the Financial Intelligence Unit (FIU) of the finance ministry, signaling its commitment to complying with Indian laws and regulations.

This move underscores Binance’s recognition of the importance of regulatory compliance in the Indian cryptocurrency landscape, particularly in light of the country’s stringent regulatory framework, including the Prevention of Money Laundering Act (PMLA) and the Virtual Digital Assets (VDA) taxation framework.

Regulatory Compliance and Tax Implications

Prior to its ban, Binance enjoyed a dominant position in the Indian cryptocurrency market, commanding nearly 90% of the country’s estimated $4-billion crypto holdings. However, the exchange’s non-compliance with tax laws allowed investors to engage in trading activities without paying the 1% tax deducted at source (TDS), which is applicable on registered exchanges.

The ban prompted a significant shift in the behavior of Indian crypto investors, who moved their holdings to local exchanges such as CoinDCX and WazirX. This migration resulted in substantial inflows for these platforms. Additionally, research indicates that global crypto exchanges operating without a registered entity in India contributed to significant tax leakage, estimated at nearly Rs 3,000 crore annually.

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Market Impact and Future Plans

Binance’s decision to comply with Indian laws and regulations represents a significant strategic shift and is widely regarded as a positive development for the crypto industry in India. Market observers anticipate that Binance’s re-entry into the Indian market could have profound implications for the market dynamics, given the exchange’s superior technology and larger liquidity compared to domestic exchanges.

Moreover, Binance has outlined ambitious plans for its renewed presence in India, including the introduction of localized payment solutions, the establishment of a dedicated India team, and further investments in the country’s blockchain ecosystem. This move aligns with broader global trends, as financial regulators in countries such as the US, the UK, and Hong Kong are increasingly embracing cryptocurrencies and approving crypto-backed securities for trade in traditional financial markets.

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