Binance has recently faced many challenges from world leaders and regulators. Sanctions, terror levels, and dismissal from major trading hubs are some challenges the crypto exchange has been facing.
As of early January, the Indian financial regulator included Binance and other offshore crypto exchanges in the illegal operations and charged them with non-submission to local regulation requirements. After several months of negotiations, the exchange recently announced its intention to change course.
Binance’s regulatory challenges
Binance, is reportedly planning a tentative return to India. Economic Times reported that this return will be effected by a fine penalty of $ 2 million. Although unclear, the report mentioned that the exchange will cast aside all the compliant measures it has been “sloppily flouting” in the past, including registering with FIU, an institution of the Indian finance ministry.
Besides complying with laws like the Prevention of Money Laundering Act (PMLA), the VDA taxation framework, and business ethics, Binance will have to abide by the laws. Binance, through its breakthrough into the Indian market, will be determined by its smart response and compliance with Indian regulations.
As global regulators advance their vigil, crypto regulations have gained more prominence. The proliferation of crypto assets is now under close regulatory watch while oversight continues.
Compliance and regulatory framework in India
In the Indian market, the placement of crypto-assets has been determined by ambiguity. Having floated on the seas of doubt the region’s watchdog has not given the class a potentially positive verdict despite the Supreme Court bypassing the RBI`s ban of financial institutions.
Trace of an equivalent of assets on the part of Virtual Financial Organizations, named the Financial Intelligence Unit (FIU-IND), is responsible for overseeing trade in cryptocurrency. Cryptocurrency exchanges facilitating exchanges or transfers of cryptocurrency must register with it. This necessity remains relevant irrespective of the location of the exchange, either in the territory of or outside India, according to the stipulation of the country’s Prevention of Money Laundering Act.
India’s regulatory policy has led to exchanges exiting its market, including OKX, and lifting restrictions in some, like Kraken and Bitfinex, to deliver crypto services in the nation. Apart from controlling Binance and other exchanges through restrictions in the Indian context, the government levies a 30% tax on every crypto income made without any provision to compensate for losses. Furthermore, traders are under the obligation of TDS – a mechanism of deduction of 1% of the tax on each crypto transaction.
