The Indian crypto industry is of the view that the Financial Intelligence Unit in India’s (FIU-IND) decision to allow Binance to operate in the country after imposing a Rs 18.82-crore fine and strict regulations to follow, will bring in a level playing field and foster healthy competition.
Binance was one of the nine offshore exchanges that was blocked in India for not registering locally and not adhering to anti-money laundering policies a few months back.
On June 19, FIU-IND issued an order following compliance proceedings and investigation into Binance's operations in India.
“As the leading exchange in India, we welcome this progress and remain committed to driving the industry forward in a responsible and sustainable manner… We believe that embracing these regulatory developments will strengthen the foundation of the crypto industry in India, fostering a secure and transparent environment for all stakeholders,” Sumit Gupta, co-founder and CEO of CoinDCX, said.
According to Balaji Srihari, business head at CoinSwitch, increased competition will bring out the best in everyone. "Our learning from being in the Indian market for over seven years and serving over two crore users is that retail users appreciate trusted and compliant platforms to deal with crypto. Which is where we spend a lot of our efforts. In an open market, competition brings out the best in everyone and with our deeper understanding of India, we're confident that we'll continue to be the preferred crypto trading platform," he said.
Manhar Garegrat, the country head for India and global partnerships at Liminal Custody, called the development as organic and described it as a significant pointer towards India's progress on regulating the digital assets markets. “A common regulation for all stakeholders and businesses - local and global - would ensure a level playing field for industry players and would provide equal growth opportunities to all the relevant stakeholders of the industry.”
As a lucrative market for global brands with large representation of the young and ambitious demographic along with an increasing set of seasoned investors, India is highly critical for regulators to protect the interests of users and consumers in every sector, according to him.
Binance’s comeback following the compliance proceedings by FIU-IND would be a victory for the Indian exchanges as they saw trading volumes shrinking over the past couple of years because of regulatory uncertainty, volatility of token prices and 30 percent tax imposed on income from crypto and 1 percent TDS (Tax Deducted at Source) added on every crypto transaction of Rs 10,000 in India.
This had led to retail investors move to locally unregistered global exchanges to evade taxes. Binance had benefited the most from this in terms of gaining users. But now by locally registering, exchanges like Binance and KuCoin too will fall under the purview of Indian regulations and investors will have to pay high taxes.