Binance is planning to make a comeback in India after a 4-month ban imposed by the nation’s Financial Intelligence Unit (FIU). According to sources familiar with the situation, the exchange has agreed to pay a $2 million penalty for non-compliance, although the exact calculation of the fine has not been confirmed.

India is identified as one of the fastest-growing crypto economies, with the highest adoption rate in 2023, according to a Chainalysis report. By re-entering the Indian market, Binance will become the second FIU-compliant foreign cryptocurrency exchange to operate in the country, following KuCoin.

Before the ban in January, Binance reportedly dominated over 90% of the Indian crypto trading volume. The surge in popularity was mainly driven by traders looking to avoid tax implications set by the Indian government.

Unregistered global cryptocurrency exchanges were reportedly causing INR 3000 crores (approx. USD 361.45 million) in tax leakage annually in India, prompting the FIU to ban unregistered foreign exchanges in the country.

One source familiar with the situation expressed disappointment, stating that it took Binance over two years to realize that no global powerhouse can demand special treatment, especially at the expense of exposing the country’s financial system to vulnerabilities.

As part of the FIU registration, Binance will now have to adhere to the same rules as local cryptocurrency exchanges, including a 1% tax deduction at source (TDS), already implemented by KuCoin and Indian crypto exchanges.

While KuCoin and Binance have complied with regulators, OKX, another exchange on the banned list, has halted operations in India, citing regulatory burden as the reason in an email to customers.

Sumit Gupta, CEO of CoinDCX, emphasized the importance of regulatory compliance in creating a sustainable crypto environment in India, stating that the focus on compliance will be crucial for building a compliant ecosystem.

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