Binance, previously banned by the Indian government, is poised to return after agreeing to pay a substantial fine of around $2 million.

As per a report by ET, the largest cryptocurrency exchange in the world is gearing up to re-enter the Indian market under the oversight of the Financial Intelligence Unit (FIU) within the finance ministry.

Binance’s India Comeback

This recent development means that Binance will now need to adhere to existing regulatory frameworks, including the Prevention of Money Laundering Act (PMLA) and the taxation framework for virtual digital assets (VDA).

A source familiar with the situation was quoted as saying,

“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.”

Previously criticized for its lax compliance with these regulations, Binance now seems committed to operating within the legal confines of the Indian cryptocurrency landscape.

With this recent move, Binance follows KuCoin’s lead, which recently announced compliance with the FIU. The exchange based in Seychelles confirmed that it will start deducting a 1% TDS on each cryptocurrency transaction initiated by users through its platform.

Binance’s Tryst With India

Earlier, Binance held a significant market share – roughly 90% – of the estimated $4 billion in cryptocurrency holdings among Indian residents.

Following the implementation of the 1% TDS on cryptocurrency trading in July 2022 by government authorities, Indian exchanges saw a nearly 90% drop in trading volume. Traders then turned to offshore crypto exchanges, including Binance.

Later in the same year, Binance’s founder and former CEO, Changpeng Zhao (CZ), stated that the exchange had no plans to expand into India due to the high tax environment. Nevertheless, he acknowledged that Binance’s services remained accessible to Indian residents.

This changed in late 2023 when the FIU issued a show cause notice to nine exchanges – Binance, Huobi, Kraken, Bitstamp, MEXC Global, Bitfinex, Kucoin, Bittrex, Gate.io – for operating illegally in the country. Subsequently, the FIU recommended to the Ministry of Electronics and Information Technology to block access to the exchanges’ websites, leading Google and Apple to remove these apps from the Play Store and App Store platforms in India.

The Ministry of Finance clarified that registration and compliance obligations do not require physical operations in India. All entities involved in virtual asset transactions must comply with regulatory requirements, such as reporting and record-keeping under the PMLA.