Binance, the popular crypto exchange, has been facing numerous challenges from world leaders and regulators. These challenges include sanctions, concerns related to terrorism, and being dismissed from major trading hubs. One of the recent challenges for Binance came from the Indian financial regulator, which declared the exchange and other offshore crypto exchanges as engaging in illegal operations and failing to comply with local regulations. However, after months of negotiations, Binance has announced its intention to make a comeback in India.
According to a report by Economic Times, Binance is planning to return to the Indian market by paying a fine of $2 million. The report suggests that the exchange will also abandon its previous non-compliant practices, such as not registering with the Financial Intelligence Unit (FIU), an institution under the Indian finance ministry. In order to successfully enter the Indian market, Binance will need to comply with laws like the Prevention of Money Laundering Act (PMLA), the VDA taxation framework, and adhere to ethical business practices. The exchange’s ability to navigate these regulatory requirements will determine its success in India.
As regulators around the world tighten their grip on crypto regulations, compliance has become a crucial aspect for crypto exchanges. The proliferation of crypto assets is now being closely monitored, and oversight is increasing.
The regulatory landscape in India has been ambiguous when it comes to crypto-assets. Despite the Supreme Court overturning the Reserve Bank of India’s ban on financial institutions dealing with cryptocurrencies, the country’s regulatory bodies have not given a clear verdict on the classification of crypto-assets. The Financial Intelligence Unit (FIU-IND) is responsible for overseeing cryptocurrency trades and exchanges, and any exchange facilitating cryptocurrency transactions must register with them, regardless of their location within or outside India, as mandated by the Prevention of Money Laundering Act.
India’s regulatory policies have led to some exchanges exiting the market, while others have had restrictions lifted to provide crypto services in the country. Binance, along with other exchanges, has faced restrictions in the Indian context. Additionally, the government imposes a 30% tax on all crypto income without any provision for compensating losses. Traders are also obligated to pay a 1% tax deduction on each crypto transaction, known as TDS.
