Binance set for India return after paying $2million in penalty: Report

Binance, the world’s largest cryptocurrency exchange that was banned from India is ready to return after paying a penalty of about $2 million, according to a report in The Economic Times.

The crypto exchange will come back as an entity registered with the Financial Intelligence Unit (FIU) of the finance ministry, the report added.

FIU is tasked with oversight of trade in virtual digital assets (VDA).

Binance will comply with all applicable laws, including the Prevention of Money Laundering Act (PMLA) as well as the VDA taxation framework.

Binance is the world’s largest crypto exchange, in terms of both asset holdings and daily trade volume. According to CoinMarketCap, it recorded a trade volume of $22 billion in the previous 24 hours (ending 7 pm IST on Wednesday), which is 25% of the global volume. 

In January, Binance was among nine offshore cryptocurrency platforms that were banned from operating in India through web addresses and mobile applications. The action was in response to the platforms’ failure to comply with FIU and PMLA guidelines.

Before the ban, Binance accounted for nearly 90 percent of the estimated $4 billion crypto holdings of Indian nationals. The platform’s market dominance is mainly attributed to its non-compliance with tax laws, which allowed investors to trade without paying the 1 percent tax deducted at source (TDS) applicable on registered exchanges. 

After the ban on Binance, a significant chunk of Indian crypto investors moved their holdings to Indian exchanges, including CoinDCX, WazirX. 

Executives in the cryptocurrency industry also pointed to Binance’s reluctance to open its trades for scrutiny, for fear that this would take away big-ticket investments.

Binance will be the second offshore exchange to register in India after Seychelles-based Kucoin announced FIU compliance last month, following which the ban on its website was lifted. 

Market leaders believe Binance's return could upend the market dynamics, as it brings superior technology and larger liquidity than Indian exchanges. It is re-entering India at a time when popular currencies such as bitcoin and ethereum are breaching all-time highs.

Binance plans to offer localised payment solutions, build a dedicated India team and invest further in the country’s blockchain system.

According to its official website, it operates in more than 100 geographies. It has significant operations in Seychelles, Malta, Cayman Islands and Singapore. It does not list any specific headquarters.