Binance, a leading global cryptocurrency exchange, has received consent to restart operations in India by the country’s financial watchdog, the Financial Intelligence Unit (FIU). This development positions Binance as the second overseas digital currency platform allowed back into the Indian market, following KuCoin’s earlier approval.
Binance’s FIU registration was revealed by Vivek Agarwal, head of the FIU, via CoinDesk, meaning it’s now an acknowledged body once again after it was part of an approximately dozen foreign platforms hit with an institutional noncompliance order late last year. In response to this order, India’s Finance Ministry directed the IT section to restrict access to the implicated crypto platforms’ URLs and mobile applications in India in mid-January 2024. Other platforms that received the order included Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.
Subsequent to this prohibitory action, several of these platforms began collaborating with the Indian regulatory entity in order to attain FIU compliance and reestablish their services for Indian customers. While Binance and KuCoin succeeded in making a comeback, other platforms such as OKX and BitStamp bowed out from the Indian market.
Cointelegraph had previously reported last month that Binance was projected to make a return to the Indian market, provided it complied with a $2 million fine for previous non-compliance.
The news of Binance’s reentry comes amidst a complex context in India surrounding cryptocurrency. A sharp 30% tax on cryptocurrency earnings and a 1% deduction at source for every crypto transaction were implemented by the Indian government, prompting Indian investors to migrate to foreign exchanges to evade this imposing taxation. At the height of this trend, Binance was believed to have accounted for 90% of India’s total trading volume.
Despite India’s active crypto scene and the keen interest of major exchanges to penetrate the Indian market, the country’s stringent taxation and regulatory uncertainty have cooled its allure for crypto traders and businesses, with many opting to move overseas. The crypto exchanges still operating in India amid these challenges are battling to win investor trust due to an absence of regulatory clarity and substantial banking facilities.