Two undisclosed sources familiar with the situation have revealed that Binance has agreed to pay a $2 million penalty to Indian regulators for non-compliance, although they did not provide details on how the fine was calculated.
India, identified as one of the fastest-growing crypto economies by a Chainalysis report in 2023, boasts the highest adoption rate. Binance’s return to the market will make it the second foreign cryptocurrency exchange to comply with the Financial Intelligence Unit (FIU) regulations, following KuCoin.
Before its ban in January, Binance reportedly dominated over 90% of the crypto trading volume in India. The surge in its popularity was largely due to traders seeking to circumvent tax obligations imposed by the Indian government.
According to reports, unregistered foreign exchanges were responsible for an annual tax leakage of approximately INR 3000 crores (about USD 361.45 million), prompting the FIU to prohibit their operation in the country.
One source commented on the situation, stating that it is “unfortunate that it took (Binance) more than two years to realize there is no room for negotiations, and (that) no global powerhouse can command special treatment, especially at the cost of exposing the country’s financial system to vulnerabilities.”
Additionally, following its FIU registration, Binance will be subject to the same regulations as local cryptocurrency exchanges, including a 1% tax deduction at source (TDS), which KuCoin and Indian exchanges have already implemented.
While KuCoin and Binance have complied with regulators’ demands, OKX, another major exchange on the list, has halted all operations in India, citing regulatory burdens as the reason in an email to its customers.
Sumit Gupta, CEO of CoinDCX, emphasized the importance of regulatory compliance in building a sustainable crypto environment in India, stating that the “focus on regulatory compliance” will be instrumental in achieving this goal.