Binance Fined Rs 18.82 Crore, Set to Resume Operations in India

Binance to pay FIU-IND Rs 18.82 crore fine to restart India operations

The Financial Intelligence Unit of India (FIU-IND) has imposed a penalty of Rs 18.82 crore on Binance, the world's largest cryptocurrency exchange, as per an order dated June 19. This penalty follows the exchange's failure to register and adhere to anti-money laundering (AML) norms under India’s Prevention of Money Laundering Act (PMLA) 2002.

Compliance and Penalty

The FIU-IND order stated:“After considering the written and oral submissions of Binance, the Director, FIU-IND, based on the material available, found the charges against Binance substantiated.”

The order requires Binance to not only pay the fine but also ensure strict adherence to Chapter IV of the PMLA 2002 and the PMLA Maintenance of Records Rules (2005). This includes robust measures to prevent money laundering and combat terrorism financing.

A Binance spokesperson responded:“We are aware of the FIU's order and are reviewing it to determine our next steps. We are eager to reenter the Indian market and continue supporting the vibrant crypto community here. Transparency, cooperation, and compliance remain our priorities.”

Rivals and Market Context

Binance is not alone in facing regulatory hurdles. Earlier this year, KuCoin paid a penalty of Rs 34.5 lakh to gain full operational status in India, re-entering the market in March. In contrast, OKX chose to discontinue its services in India from April 30 due to regulatory challenges.

Despite the challenges, Binance previously dominated the Indian crypto market. Reports suggest that before its operations were blocked, Binance held approximately 90% of the $4 billion in crypto assets owned by Indian investors.

Implications for Indian Crypto Market

Binance’s reentry, however, comes amid a challenging environment for local crypto exchanges. Over the past two years, trading volumes have dwindled due to regulatory uncertainty, the imposition of a 30% tax on crypto income, and a 1% TDS on transactions exceeding Rs 10,000. Many retail investors turned to unregistered global exchanges to avoid these taxes.

With Binance now complying with local regulations, it joins other exchanges like KuCoin in being subject to Indian tax laws, meaning investors will face higher costs.

Binance’s Global Presence

Globally, Binance continues to dominate the crypto market, holding 49.7% market share in the first quarter of 2024, according to CoinGecko data. The platform's move to reestablish itself in India signals its commitment to maintaining its foothold in one of the world's largest potential crypto markets.

As the Indian crypto market evolves, Binance’s compliance with local regulations may set a precedent for other global exchanges looking to operate in the country