Global cryptocurrency exchange Binance recently faced regulatory challenges in India due to non-compliance with local Anti-Money Laundering (AML) rules.
Subsequently, India's Financial Intelligence Unit (FIU) blocked Binance and nine other foreign crypto exchanges from offering any services.
However, there is good news on the horizon for Binance. According to recent reports by The Economic Times, Binance is preparing to come back to the Indian market after a four-month hiatus, accompanied by a $2-million fine as a penalty for non-compliance.
This indicates a potential improvement in the relationship between Binance and Indian regulators, paving the way for the return of a major player in the cryptocurrency industry.
Optimism will also return to Indian crypto investors who rely heavily on Binance's platform for trading, especially during legal challenges.
The ban on Binance and other foreign exchanges was due to their failure to follow India's strict AML regulations.
Binance, in particular, faced consequences as it accounted for over 90% of Indian crypto trading volume before the ban. Indian users, seeking to avoid high tax burdens, had turned to foreign exchanges like Binance, leading the government to crack down on non-compliant platforms.
Adherence and Outcomes
Changes were observed in India's crypto market as a consequence of the ban.
Previously, foreign exchanges were viewed as places for tax evasion, but now they had to comply with regulations and register with the FIU, which subjected them to the same rules as Indian platforms.
By implementing a 1% tax deduction at source (TDS), KuCoin, another major foreign exchange, took the lead, setting an example for others planning to return to India.
This change indicates a new emphasis on compliance and accountability, marking the beginning of a more regulated era for crypto trading in India.
Key Lessons
Binance's re-entry into India was not a simple process. As per reports, it took the exchange more than two years to understand that no global entity should be given special treatment at the cost of a country's financial security.
Although it was a late realization, it was a step in the right direction. The decision to adhere to FIU regulations indicates Binance's growth in its approach to regulatory frameworks, highlighting the significance of conforming to rules in the regulatory environment.