Kelvin Testimony Amachree
A recent penalty of $2.25 million has been imposed on Binance, a major player in the cryptocurrency exchange industry, by India’s Financial Intelligence Unit (FIU). The FIU’s action stemmed from Binance’s failure to comply with the Prevention of Money Laundering Act in India, offering services to Indian clients without adhering to the country’s anti-money laundering (AML) rules.
Back in December 2023, the FIU issued a notice to Binance, prompting the exchange to explain why punitive measures should not be taken against them. This move was part of a larger crackdown on cryptocurrency exchanges in India operating without proper registration. Alongside Binance, eight other exchanges like Kucoin, Huobi, and Kraken also encountered a ban on providing services in the region.
However, Kucoin has since rectified its status by registering with India’s regulatory bodies, lifting the ban. This incident underscores the significance of abiding by the regulatory framework within India’s cryptocurrency sphere. The fine imposed on Binance and the prohibition faced by other exchanges underscore the increasing scrutiny of cryptocurrency entities by regulatory authorities to ensure compliance with AML regulations.
Binance’s Future in India Following the Fine
Following the settlement of its legal issues, Binance, the leading global cryptocurrency exchange, is eying a comeback in the Indian market. Given India’s substantial presence in the cryptocurrency realm, Binance is keen on reshaping its business activities in South Asia. Nevertheless, the exchange must first complete registration in accordance with India’s AML regulations and taxation laws.
Prior to its suspension, Binance wielded significant influence in India’s crypto landscape, commanding 90% of the country’s crypto assets. Nevertheless, its non-compliance with tax regulations enabled investors to circumvent the mandated 1% tax deduction at source (TDS). The imposition of steep taxes on cryptocurrency investors by the Indian government has impeded the growth of the crypto market in the nation.
Despite facing hurdles, Binance is enthusiastic about resuming operations in India. By securing registration with the Financial Intelligence Unit (FIU), the exchange is poised to recommence its services in the country. Binance’s re-entry into the Indian market is anticipated to invigorate the local crypto ecosystem, which has felt the impact of the ban on cryptocurrency exchanges.