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Big bucks are moving around at Binance. The world's biggest exchange is returning to India after registering with the Financial Intelligence Unit (FIU) of the financial ministry with a $2 billion penalty, whilst converting $1 billion of its Secure Asset Fund for Users (SAFU) to USDC.
FIU, which oversees the trade of digital assets in India, is ensuring Binance complies with regulations and laws including the Prevention of Money Laundering Act (PMLA) and taxation framework, “which it had been sloppily flouting until now” according to India's Economic Times.
India had previously banned crypto exchanges such as Binance, KuCoin, and OKX for failing to comply with the country's regulatory policies.
Last month, OKX announced it is ending its services in India, giving its users just over one month to withdraw their funds.
The move comes three months after the FIU issued compliance notices to nine foreign crypto exchanges including Binance and Kraken, although OKX was not on the list.
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Indian officials said the country's stance “has always been clear to all global cryptocurrency exchanges — comply with all laws to continue operating in India”.
Another source told ET, it is “unfortunate that it took (Binance) more than two years to realise there is no room for negotiations, and (that) no global powerhouse can command special treatment, especially at the cost of exposing the country’s financial system to vulnerabilities."
Before its ban, Binance accounted for almost 90% of India's $4 billion crypto holdings but its dominance has been attributed to its non-compliance with tax laws, through which traders avoided the 1% tax.
Nonetheless, Manhar Garegrat, India head at crypto custody solutions provider Liminal, said Binance’s re-entry must be considered a win, which should bring maturity to the crypto industry.
“However, it must be kept in mind that all exchanges are now on a level playing field, where there is no evasion of taxes. User acquisition and retention will be a different ball game altogether,” he added.
Meanwhile, Binance's $1 billion conversion of its SAFU asset to USDC accounts for the entire fund.
"Making use of a trusted, audited, and transparent stablecoin for SAFU further enhances its reliability and ensures it remains stable at $1B," Binance explained.
Binance has also been caught up in African drama after Nigeria accused the exchange of crashing its national currency. A Binance executive who escaped custody has been tracked down to Kenya and is now facing extradition back to Nigeria.
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