Following an earlier ban by the Indian government this year, Binance, the leading global cryptocurrency exchange, is planning to make a comeback into the Indian market. According to insider information, Binance will pay around $2 million as part of its plan to re-enter the market. The exchange aims to function as a registered entity under the Financial Intelligence Unit (FIU) of the finance ministry, demonstrating its intent to adhere to Indian laws and regulations.
In simpler terms, this action by Binance highlights their understanding of the significance of following regulations in India’s cryptocurrency market, given the country’s strict regulatory environment which includes laws like the Prevention of Money Laundering Act (PMLA) and the Virtual Digital Assets (VDA) taxation rules.
Regulatory Compliance and Tax Implications
Before being prohibited, Binance held an overwhelming presence in India’s cryptocurrency sector, controlling approximately 90% of the country’s $4-billion worth of crypto assets. Yet, the exchange flouted tax regulations, enabling traders to transact without the mandatory 1% Tax Deducted at Source (TDS) payment that registered exchanges enforce.
Indian crypto investors responded notably to the ban by transferring their assets to homegrown exchanges like CoinDCX and WazirX. This mass transfer led to a substantial increase in business for these companies. Moreover, studies suggest that unregistered global crypto exchanges have resulted in approximately Rs 3,000 crore in annual tax losses.
Market Impact and Future Plans
Binance’s choice to follow Indian laws and regulations is seen as a major tactical change and a welcome move in India’s crypto community. Experts believe that Binance’s return to the Indian market could bring about significant changes, considering its advanced technology and larger pool of liquidity compared to local exchanges.
In addition, Binance is making significant strides in expanding its operations in India. They plan to offer local payment methods, build a specialized Indian team, and increase investments in India’s blockchain sector. This action aligns with international developments, as regulatory bodies in nations like the US, the UK, and Hong Kong are becoming more accepting of cryptocurrencies and allowing crypto-linked securities to be traded on traditional financial markets.
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2024-04-18 08:57