Binance, the leading cryptocurrency exchange, plans to re-enter the Indian crypto market. Initially, in 2023, Binance faced severe restrictions imposed by the Indian government due to several regulatory concerns. Binance would consider paying a $2M fine as part of its re-entry strategy. The observers concluded that Binance would step into India as a registered crypto exchange under the Financial Intelligence Unit (FIU). Accordingly, the government of India would have an eye on digital trade.
With this, Binance considers following all the laws including the Prevention Money Laundering Act (PMLA) and the entire taxation ordinances. Moreover, they will not pertain to similar acts which forced the government to lay down strict restrictions against Binance as earlier. Binance ignored its request for comment at the said time. This ultimately raised the question of verification regarding the accuracy of the $2M Penalty.
Why Binance Faced the Restrictions from Indian Government
The Financial Intelligence Unit (FIU) in December 2023, witnessed regulatory issues with nine exchanges including Binance and thus examined the warranty action by asking the Ministry of Electronics to set restrictions on these exchanges.
The Ministry of Finance has issued a directive to cryptocurrency exchanges authorized by the government, in response to an urgent announcement regarding the clarification of crypto laws. As per the MOF report, cryptocurrency exchanges need not be present physically in India to follow the crypto laws. This rule is universal to all the exchanges despite their location. The regulatory body expects timely reporting, accurate record-keeping and other provisions as set by the Prevention Of Money Laundering Act (PMLA).
Initially, before India banned the Binance exchange, it always remained the first choice of Indians to trade cryptocurrency.
The reason for its high popularity showed that Binance never followed the Indian tax rules. As per the crypto tax law, each registered exchange in India is authorized to pay a 1% tax on transactions, whereas the Binance facilitated the trading without the need to pay tax. This made the Binance the cheaper exchange source in India which led the exchange to face strict restrictions.
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