Cryptocurrency exchange Binance is reportedly considering a return to the Indian market after being banned at the end of 2023, and could face a fine of around $2 million upon re-entry, according to an Economic Times report on Thursday.
The platform’s future revenue will depend on whether it registers with the Treasury Department’s Financial Intelligence Unit (FIU), which oversees virtual asset commerce. Binance plans to comply with relevant laws, including the Prevention of Money Laundering Act (PMLA) and the cryptocurrency tax regime, after previously ignoring them, according to sources cited by the media.
Although physical presence in India is not required, all Virtual Asset Service Providers (VASPs) are subject to Indian regulations set out by the Ministry of Finance. This includes complying with reporting, recordkeeping and other obligations set forth in the PMLA.
India has been actively integrating the cryptocurrency sector into its financial system, introducing regulations in March mandating the collection of know-your-customer (KYC) data from cryptocurrency companies. Additionally, VASPs operating in India, regardless of their location, must register with the FIU as a reporting entity and comply with the PMLA.
Prime Minister Narendra Modi has advocated for global regulation governing cryptocurrencies, highlighting India’s commitment to regulatory clarity in the cryptocurrency sector.
Before the ban, Binance reportedly had a dominant market share in India, accounting for nearly 90% of the roughly $4 billion in cryptocurrency holdings by Indian citizens. The reason for this popularity is that it is not compliant with Indian tax regulations as it facilitates trading without the 1% tax withholding tax (TDS) levied by registered exchanges. The introduction of TDS has led to a significant movement of users to overseas cryptocurrency exchanges, including Binance.
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