Binance poised to make a comeback in India after settling a $2 million penalty

After settling a fine of approximately $2 million, Binance, the largest cryptocurrency exchange globally, which had been prohibited from operating in India, is now prepared to make a comeback. 

Binance is set to be the second cryptocurrency exchange from overseas which marks a return to the country after KuCoin after India’s financial regulatory authority restricted access to cryptocurrency exchanges due to lack of compliance. 

The crypto exchange will return as an entity registered with the Financial Intelligence Unit (FIU) under the finance ministry. The FIU is tasked with supervision of trade in Virtual digital assets (VDU). The Indian Ministry of Finance’s FIU blocked access to nine different cryptocurrency exchange’s URLs and Mobile Applications, one of which was Binance, in the first week of January, for not complying with the Anti-Money Laundering Act of the country. 

It is reported that Binance accounted for over 90% of the country’s crypto trade volume before it’s ban back in January this year. 

To bypass the acute tax impositions on cryptocurrency, Indian Cryptocurrency traders swarmed to foreign cryptocurrency exchanges like Binance, which permitted investors to trade without paying the 1 percent tax deducted at source (TDS) applicable on registered exchanges, which caused the government to ban the various overseas crypto exchanges that were not registered with the FIU. Now by having the FIU registration, Binance will also adhere to the same rules and regulations that Indian crypto exchanges adhere to. 

After the nine cryptocurrency exchanges were banned, the majority of Indian crypto investors moved their holdings to different Indian Crypto exchanges like WazirX, CoinDCX. 

Binance has a significant background in India. There were reports suggesting its acquisition of the local crypto exchange WazirX in 2019, though Binance later stated that the deal never went through. It was claimed by Binance that Binance only provided wallet services for WazirX as a tech solution while WazirX was responsible for all other aspects of the exchange which included Know Your Customer (KYC), user sign-up, trading and initiating withdrawals. 

As KuCoin and Binance have opted to register with the FIU in India, OKX, another prominent crypto exchange among the nine that were blocked, has ceased operations entirely, citing regulatory pressures. 

Key players in the market anticipate that Binance’s comeback could disrupt market dynamics, given its advanced technology and greater liquidity compared to Indian exchanges. Its re-entry into India coincides with the surge in popularity of currencies like bitcoin and ethereum, which are reaching record highs. Binance also plans to offer localized payment solutions, build a team solely dedicated to operations in India, and invest in the country’s blockchain system. 

Binance is the largest cryptocurrency exchange in the world, in terms of both daily trade volume as well as asset holdings. As per CoinMarketCap, it has registered a trading volume of $22 billion in the preceding 24 hours (ending at 7 pm IST on Wednesday), constituting 25% of the global volume. 

As per official data on the Binance website, Binance operates in more than 100 countries. Its operations hold considerable presence in Seychelles, Malta, the Cayman Islands, and Singapore. 

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