Binance’s services were pursued by the cryptocurrency trading community in India to circumvent the government’s tax on cryptocurrency transactions. The new development occurred at a time when the Indian financial agency approved Binance and Kucoin to function as virtual asset providers in the country. The Indian government banned Binance and other offshore cryptocurrency platforms for violating anti-money laundering rules. Binance provided escrow services to Indian cryptocurrency investors, allowing them to trade by paying in local currency.
A leading English newspaper in India reported that Binance has discontinued its cash payment service for P2P transactions. Binance customers in the United Arab Emirates can still use the local currency UAE Dirham, for transactions. Binance did not respond to the report’s filing, and Indian authorities question the use of leading crypto platforms for tax evasion and money laundering activities. The Indian Information Technology Ministry ordered tech stalwart Apple to remove these cryptocurrency platforms from the iOS store.
The finance ministry had issued a show cause notice to offshore cryptocurrency exchanges, including Binance, Kraken, and Bitfinex, for illicit operations in the country. The Financial Intelligence Unit of the Indian Government has not registered the aforementioned offshore cryptocurrency exchanges. Authorities accuse crypto firms like Binance, Kraken, and Bitfinex of violating anti-money laundering regulations.The cryptocurrency business establishments in India operate under the Money Laundering Prevention Act.
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According to the Money Laundering Prevention Act, Indian crypto businesses will necessarily have to report suspicious transactions and perform customer due diligence. Offshore cryptocurrency exchanges in India should obtain a license from the Financial Intelligence Unit to provide virtual asset service.
Binance, which was banned in India in January, is contemplating a return to the country after paying a $2 million penalty, despite the fact that Kucoin has paid fines totaling INR 35.5 Lakh for past non-compliances. The stringent government action against offshore crypto exchanges is beneficial for domestic exchanges in the country. India imposed a huge tax on earnings from digital asset transfers, apart from the 1% Tax Deducted at Source. Domestic cryptocurrency exchanges in India are experiencing a period of growth as offshore exchanges struggle to adhere to stringent regulations.
CoinSwitch is the largest cryptocurrency exchange in India with a user base of 20 million, with WazirX following closely behind. India is a prominent country in the field of peer-to-peer crypto trading. Cryptocurrency traders in India are entitled to a diverse array of payment options, including online fund transfers, UPI (Unified Payments Interface), physical cash, and cash deposits into bank accounts. Additionally, 75% of cryptocurrency traders in India are under the age of 35.
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This will enable crypto firms to circumvent the restrictive tax regulations imposed by the Indian Central Government on cryptocurrency transactions. Establishing legitimacy in the Indian crypto market is challenging for both domestic and offshore cryptocurrency exchanges. Cash deposits or invoices are no longer permitted for Binance users in India to purchase or sell cryptocurrency.
