Binance, the biggest cryptocurrency by trading volume, is facing trouble operating in multiple countries due to regulatory pressure. In the latest turn of events, India’s Financial Intelligence Unit (FIU) has imposed a fine of around $2.25 million against Binance. The fine came in for non-compliance with the country’s anti-money laundering (AML) regulations.
India shows its harsh stance
FIU’s move against Binance highlights India’s strict stance on virtual digital asset service providers. These exchanges must register as reporting entities and adhere to local AML laws.
According to reports, Binance registered with the FIU in May in order to align with regulations and resume its operations in India. This comes after the watchdog issued show-cause notices to nine offshore exchanges for violating AML rules. However, the Ministry of Electronics and Information Technology was urged to block online access to these exchanges.
It is important to note that, back in March, the crypto exchange KuCoin faced a similar situation. It got away with a smaller fine of over $41k after registering with the FIU.
Binance is facing regulatory challenges beyond India. Canada’s anti-money laundering agency imposed a $4.38 million fine on the exchange for similar reasons AML. As reported earlier, Changpeng Zhao (CZ), Binance’s former CEO, was sentenced to four months in prison by the US District Judge for contravening the country’s money laundering laws.
What’s behind this?
As reported, FIU India had reported receiving requests from four additional offshore crypto exchanges that are willing to operate in India. This was followed by a ban imposed in early 2024 on nine crypto exchanges. The list includes Binance, KuCoin, Huobi, Kraken, Gate.io, Bitstamp, MEXC Global, Bittrex, and Bitfinex due to non-compliance with India’s AML laws.
Before the bans were imposed, FIU India had issued show-cause notices to the exchanges for AML violations. The increasing acceptance of tokenization of bonds and securities in India, along with the country’s grassroots crypto adoption and Web3 developer activity.
It has made the Indian market too significant for offshore exchanges to ignore, despite strict compliance requirements and unfavorable taxation. Sharat Chandra, co-founder of the India Blockchain Forum, emphasized the growing interest in offshore exchanges in the Indian market due to these factors.