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Crypto exchange Binance is reportedly contemplating a comeback to India’s market after being banned in late 2023, with the potential re-entry subject to a penalty of around $2 million, as per the Economic Times report on Thursday.
The platform’s prospective return hinges on its registration with the finance ministry’s Financial Intelligence Unit (FIU), responsible for overseeing virtual asset commerce. Binance intends to comply with relevant legislation, including the Prevention of Money Laundering Act (PMLA) and the crypto taxation framework, after previously neglecting these regulations, according to a source cited by the outlet.
While physical presence in India is not mandatory, all virtual asset service providers (VASPs) are subject to Indian regulations, as clarified by the Ministry of Finance. This includes compliance with reporting, record-keeping, and other obligations outlined in the PMLA.
India has been actively integrating the crypto sector into its financial system, introducing regulations last March mandating Know Your Customer (KYC) data collection from crypto companies. Additionally, VASPs with Indian operations, regardless of their location, must register as reporting entities with the FIU and adhere to the PMLA.
Prime Minister Narendra Modi has advocated for global regulations governing cryptocurrencies, underscoring India’s commitment to regulatory clarity in the crypto space.
Before its ban, Binance reportedly held a dominant market share in India, accounting for nearly 90% of the estimated $4 billion in cryptocurrency holdings among Indian citizens. Its popularity was attributed to its non-compliance with Indian tax regulations, as it facilitated trading without the 1% tax deducted at source (TDS) levied by registered exchanges. The introduction of the TDS prompted a significant migration of users to offshore crypto exchanges, including Binance.
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