Binance’s Re-Entry Into India’s Crypto Market
After a four-month hiatus, Binance, one of the world’s largest cryptocurrency exchanges, is poised to re-enter the Indian market after paying a $2 million fine for non-compliance with local regulations. The hiatus by India’s Financial Intelligence Unit’s (FIU) ban on Binance and nine other foreign crypto exchanges for failing to adhere to the country’s Anti-Money Laundering Act.
This ban caused a significant reduction in India’s crypto trading volume, as Binance alone accounted for over 90% of Indian crypto trading activity prior to the ban. Indian crypto users turned to foreign exchanges like Binance to circumvent stringent tax regulations, prompting the government to crack down on overseas exchanges not registered with the FIU.
Now, with the prospect of re-entering the Indian market, Binance and other foreign exchanges are expected to adhere to the same rules and regulations as their Indian counterparts. KuCoin, another overseas exchange, has already initiated compliance measures by implementing a 1% tax deduction at source (TDS). Other foreign exchanges eyeing entry into the Indian market will take the same step.
Impact on India’s Crypto Trading Ecosystem
Binance’s history in India dates back to 2019, when it was rumored to have acquired local crypto exchange WazirX. However, Binance later clarified that the deal did not materialize, explaining that it only provided wallet services for WazirX.
Hence, the latter remained responsible for all other operations of the exchange, including user registration, Know Your Customer (KYC) procedures, trading, and withdrawals. While Binance and KuCoin have chosen to pursue FIU registration to resume operations in India, other exchanges like OKX have opted to shut their operations entirely due to the regulatory burden.
Binance Secures Full Regulatory License in Dubai
In a related development, Binance has successfully obtained a regulatory license in Dubai. This milestone comes after months of intense scrutiny and regulatory challenges the exchange faced.
Binance CEO Richard Teng confirmed in a recent interview that the long-awaited Virtual Asset Service Provider (VASP) license was granted to Binance after co-founder Changpeng Zhao gave up his voting power in the exchange’s Dubai entity. This move reflects Binance’s commitment to adhering to regulatory demands, particularly in the wake of recent legal battles.
Regulatory Compliance And Legal Challenges
Challenges have marked Binance’s journey towards regulatory approval in Dubai. In November 2023, Binance agreed to a $4.3B settlement with US authorities to resolve federal charges related to anti-money laundering (AML) violations.
Zhao’s resignation as CEO and guilty plea were part of this settlement. His sentencing is scheduled for April 30. The severance of ties between Binance Dubai and Zhao was a move to address concerns Dubai’s VARA officials raised.
By relinquishing his voting powers, Zhao ensured that regulatory scrutiny did not impede the exchange’s operations in Dubai. Binance’s successful acquisition of a full regulatory license in the United Arab Emirates (UAE) will reshape its future operations in the region.
According to Alex Chehade, Binance Dubai’s general manager, the UAE’s senior leadership aims to establish the region as a hub for Web3 technologies, leveraging cryptocurrencies to diversify from traditional sectors like fossil fuels.