Media: Binance will return to the Indian market after paying a fine for non-compliance with AML norms

What’s new? The largest centralized crypto exchange (CEX) Binance, whose operations were banned by the Indian government in January, is all set to return to the country after paying a $2 million fine, sources told The Economic Times. The platform will re-enter the market as a legal entity registered with the Finance Ministry’s Financial Intelligence Unit (FIU), which is tasked with overseeing trading in virtual assets.

Material by The Economic Times

What else is known? To reopen, Binance will need to comply with the Prevention of Money Laundering Act (PMLA) and operate under the Virtual Digital Assets (VDA) tax regime, which sources say the exchange has not done previously.

Late last year, the FIU accused Binance and other leading foreign crypto exchanges of failing to comply with the PMLA and called on the Ministry of Communications and Information Technology to block their websites in the country. Virtual asset service providers were required to register with the FIU and file AML compliance reports as early as March 2023.

Following this, some exchanges’ apps were removed from the App Store in India, and OKX announced it would exit the local market by April 30.

India’s central bank opposed the integration of cryptocurrencies into the financial system

According to the regulator, in its current form, such assets do not bring benefits to the economy

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According to ET, Indian citizens own $4 billion worth of cryptocurrencies, and before the ban, Binance held 90% of it. The platform’s dominance can be attributed to its non-compliance with tax laws, as users were able to trade without paying the 1% fee that registered exchanges charge.

After Binance’s ban, a significant portion of users moved assets to local exchanges, including CoinDCX and WazirX, which reported a 2000% increase in weekly fund inflows.

Binance will become the second foreign exchange registered in India, with Seychelles-based KuCoin announcing FIU compliance in March, after which its website was unblocked. However, in the same month, it faced allegations of operating without registration and non-compliance with AML norms already in the United States. At the same time, KuCoin was the leader in spot trading volume growth in March with a 262% increase in volume

Indian officials told ET that their stance on crypto exchanges has always been clear and unambiguous: they need to comply with legislation to operate in the local market. “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,” the journalists quoted a source as saying.

However, the official could not confirm the amount of the $2 million fine or explain how that particular amount was calculated.