Global cryptocurrency exchange Binance has been granted approval by the Indian financial regulator, the Financial Intelligence Unit (FIU), to provide its services in India. This makes Binance the second offshore crypto exchange to receive regulatory approval, following KuCoin.
Vivek Agarwal, the head of FIU, confirmed that Binance is now a registered entity, according to a report from CoinDesk. In December 2023, Binance and KuCoin, along with several other foreign crypto exchanges, received a notice of noncompliance. The Indian Finance Ministry instructed its IT department to block access to the banned crypto platforms in India within 15 days of receiving the notice, which took effect in mid-January 2024.
Other exchanges that received the regulatory notice include Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex. In response to the ban, several crypto platforms have been working with the Indian regulatory body to obtain FIU compliance and resume their services for Indian customers. While KuCoin and Binance have successfully navigated this process, OKX and BitStamp have opted to close their services in India.
Although news of Binance’s FIU registration has only just emerged, Cointelegraph reported in the third week of April that Binance was expected to return to India after paying a $2 million fine for noncompliance.
India’s crypto industry has faced challenges due to the country’s tax regulations and lack of regulatory clarity. The imposition of a 30% tax on crypto gains and a 1% tax deduction on each crypto transaction has led many Indian investors to seek out foreign crypto exchanges to avoid the tax regime. At its peak, Binance reportedly accounted for 90% of the total trading volume from India.
Despite the presence of a thriving crypto market and interest from major exchanges, India has seen a decline in crypto activity as traders and businesses have shifted overseas. The remaining crypto exchanges in the country continue to struggle to gain investor trust due to the lack of banking facilities.
Cointelegraph has reached out to Binance and FIU for comment but has not yet received a response at the time of publishing.