Cryptocurrency exchange Binance is considering re-entering the Indian market after being banned there in late 2023. A potential re-entry would carry a penalty of about $2 million, the Economic Times reported Thursday.
The platform’s return would be contingent on registration with the Finance Ministry’s Financial Intelligence Unit (FIU). The FIU is responsible for overseeing the trading of virtual assets.
The source told the outlet that Binance intends to comply with all relevant regulations, including the Prevention of Money Laundering Act (PMLA) and the cryptocurrency taxation framework. Previously, Binance had neglected these regulations.
In December, the FIU advised the Ministry of Electronics and Information Technology to restrict access to the web addresses of nine cryptocurrency exchanges, including Binance.
Meanwhile, the Ministry of Finance has clarified that registration and compliance requirements do not require a physical presence in India. The regulatory framework applies to all entities involved in transactions in virtual assets. This includes reporting, record-keeping and other obligations imposed under the Prevention of Money Laundering Act (PMLA).
India is actively integrating the cryptocurrency sector into its established financial system. Last March, legislation was introduced mandating the collection of Know Your Customer (KYC) data from crypto companies. At the same time, FIU registration became a requirement for these companies.
The regulations apply to all virtual asset service providers (VASPs) doing business in India, regardless of their onshore or offshore locations. These entities must register with the FIU as reporting entities and comply with the PMLA.
Additionally, in August, Prime Minister Narendra Modi advocated the need for global regulation of cryptocurrencies.
Binance dominates the Indian cryptocurrency market
Binance reportedly held a dominant market share before the ban, accounting for nearly 90% of the estimated $4 billion in cryptocurrency wallets among Indian citizens.
This dominance was primarily attributed to non-compliance with Indian tax laws. Unlike registered exchanges, which charged a 1% withholding tax (TDS) on transactions, Binance facilitated trading without these tax consequences.
The introduction of 1% TDS on cryptocurrency trading in India has clearly resulted in a significant migration of users, with millions moving their business to foreign cryptocurrency exchanges, including Binance.
