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Binance Comeback Will Upheaval Indian Crypto Market

Key Takeaways
  • Binance is taking re-entry into the Indian Cryptocurrency market which highlights the potential threats and benefits to local exchanges.
  • Binance is the whole ecosystem that interests the world with innovative tactics to surf in the cryptocurrency market.
  • The regulatory focus on the Indian crypto business has recently increased, with initiatives to guarantee legal operations and advance investor safety.
15-May-2024 Sakshi Jain
Binance Comeback Will Upheaval Indian Crypto Market

Binance Back In India, Is a Threat or Thrive To Crypto Market?

Binance, a well-known cryptocurrency exchange in 2017. One of its main focuses is trading altcoins. Binance offers crypto-to-crypto trading for over 350 cryptocurrencies and virtual tokens, such as Bitcoin (BTC), Ether (ETH), Litecoin (LTC), Dogecoin (DOGE), and its coin, BNB. The Binance website allows users to trade cryptocurrencies. It supports hundreds of the most popular coins. Binance provides users with a cryptocurrency wallet to store their virtual currency. Despite having a global presence, Binance is prohibited by law in some nations. Through the exchange support services, users can transact cryptocurrency or earn interest. 

Why Binance, OKX, and Kucoin Banned In India? 

Binance, the biggest cryptocurrency exchange in the world which the government outlawed in January is preparing to make a $2 million payment to re-enter India. International cryptocurrency exchange Binance has received permission from the Financial Intelligence Unit (FIU), an Indian financial regulator, to provide its services in India. As of right now, Binance is preparing to return to India while adhering to local market regulations.

Binance has reassured its Indian user base about the safety and security of its accounts and cash in the aftermath of India's recent ban on international cryptocurrency exchanges. The FIU provided information that led to the ban, which was put into effect by the Ministry of Electronics and Information Technology in January. The information mentioned allegations of money laundering and noncompliance with Indian cryptocurrency regulations.  

The FIU sent notifications to the nine exchanges requesting an explanation for their operations in India without the required authorizations or permissions. In response to these suggestions, the ministry ordered that access to these platforms' URLs be blocked. The guarantee follows the removal of nine cryptocurrency service providers including OKX and Kucoin from the Apple app store, which led to the blocking of their websites. 

Is Binance a Threat To Indian Exchanges?

Yes, Binance is a threat to Indian Exchanges due to the following reasons:

Brokerage

Many Indian investors rushed to foreign cryptocurrency exchanges to avoid the implemented tax regime after India levied a steep 30% tax on cryptocurrency gains and a 1% tax deduction at source on every cryptocurrency transaction. Binance was said to have accounted for 90% of all trade volume from India at the height of the tax drain. There are still around USD 4 billion worth of cryptocurrency assets on offshore platforms, mostly held by Binance as customers sought to avoid the 1 percent source tax. 

Competition

Experts advise transferring your valuables to an Indian exchange or your pocket rather than hastily selling them after the ban. Once it is in a personal wallet, it can be sold or swapped when the moment is right. Following the prohibition, there has been a noticeable increase in the number of domestic exchange registers, suggesting that investors are switching to domestic venues. India is said by Binance to have the most cryptocurrency users worldwide. Binance is a global brand with a global perspective in terms of price. Binance is a platform that offers several functions beyond cryptocurrency. Binance is a whole ecosystem. Hence, it is a threat to Indian exchanges because it will dominate the market with a global presence and innovative trading activities while Indian exchanges do not have the potential to compete with Binance.

No. of Tokens

If the number of Tokens of Binance and Indian Exchanges is compared then it will be a threat to Indian Exchanges because Binance has more than 350 cryptocurrencies. None of the exchanges of India can compete with several tokens listed on Binance. That’s why it is a threat to Indian Exchanges. Binance trading spectrum is huge and this may suppress the Indian exchange like CoinDCX, WazirX, and many others. Binance is the whole ecosystem that interests the world with innovative tactics to surf in the cryptocurrency market.

Indian Exchanges lack liquidity, reliability, trust, and regulations. 

India has cooled on the crypto heat map despite having a booming cryptocurrency market, with most of the main exchanges aiming to enter the nation due to tax restrictions and unclear regulations. Many cryptocurrency traders and companies involved in the space have moved abroad, and the few cryptocurrency exchanges still operating struggle to win over investors since they lack banking services.

Due to India's 30% capital gains tax and 1% transaction fee that will be implemented in 2022, many local cryptocurrency traders have moved to international platforms that offer laxer know-your-customer regulations. A famous Indian exchange called WazirX had a 97% drop in trading activity over two years as a result of regulatory arbitrage and a general crypto winter. 

What Challenges Binance Will Face While Re-Entering In India?

Due to regulatory issues and data security, Binance is banned in India and now it's preparing to return to India. Does Binance comply with all regulatory norms and data privacy policies of India? There are challenges that Binance will face in India for instance regulatory strictness, competitors, etc.

The FIU license

The cryptocurrency exchange will reappear as an organization that is registered with the finance ministry's Financial Intelligence Unit (FIU). Supervision of virtual digital asset trade is assigned to FIU (VDA). Binance promises to abide by all relevant rules, which include the VDA taxation structure and the Prevention of Money Laundering Act (PMLA), "which it had been sloppily flouting until now."

India has consistently made it plain that all international Bitcoin exchanges must follow rules to maintain operations there. Unfortunately, it took Binance more than two years to realize there was no room for negotiations, especially at the cost of exposing the country's financial system to vulnerabilities. No global giant may demand special treatment. 

The Federal Investigation Unit (FIU) is an Indian government organization that examines financial transactions. It accused nine cryptocurrency companies of breaking India's anti-money laundering laws and sent show cause warnings to them late last month. We are aware that Binance and other cryptocurrency companies are impacted by an IP restriction. One of the FIU-compliant companies saw a $1 million increase in cryptocurrency deposits from well-known exchanges like Binance. In a recent post on X, CoinSwitch's co-founder and CEO stated, "Offshore exchanges should seriously consider registering with the FIU-IND and adhering to India's AML and CFT regulations. 

Indian exchanges created credibility

You should transfer your funds to an Indian cryptocurrency exchange that is FIU-registered if you are still trading on an overseas platform that is not registered with the FBI but hasn't been banned yet. The best course of action is to sell your assets rather than simply transfer them to an Indian exchange or your wallet because trading on foreign platforms carries inherent dangers. Once they are in your wallet, trading or selling them as you see fit is simple. Unocoin, WazirX,  and CoinDCX are some of the biggest  and most established cryptocurrencies in India.

The CEO and co-founder of Mudrex stated, "The Indian government has consistently encouraged innovation and responsible expansion in the cryptocurrency sector.  Since it provides them with a more individualized experience and, more crucially, a means of pursuing legal action if fraudulent behavior occurs on their account, Indian investors should always strive to place their assets in FIU-compliant entities.

When utilizing money on foreign exchanges, it is usually better to try to transfer the money back to India. The regulatory focus on the Indian cryptocurrency business has recently increased, with initiatives to guarantee legal operations and advance investor safety being the main highlights.

More exchanges will lead to more transactions in the ecosystem 

The global adoption of cryptocurrencies has been accompanied by the growth of cryptocurrency exchanges, or online markets where investors, consumers, and dealers may buy, sell, and store virtual currencies. A cryptocurrency exchange, like a stock market, makes it easier to trade virtual currencies like Bitcoin, Ethereum, and Tether. These exchanges function similarly to e-brokerages on online markets, using PC features or mobile apps. Users of cryptocurrency exchanges can also access a wide range of trading and investment instruments. 

Conclusion

The facts and findings above by Coin Gabbar reflect the whole ecosystem of Binance. It also expresses the Binance exchange in the cryptocurrency market and why it was banned in India. After complying with regulatory norms Binance is back in India, which shows India’s strict regulations for foreign markets. Hence, Binance will follow the rules and regulations imposed by India and register itself with FIU. Binance is taking re-entry into the Indian Cryptocurrency market which highlights the potential threats and benefits to local exchanges like CoinDCX, WazirX, etc. Binance dominates in terms of tokens, volume, and trading pairs, and is the global cryptocurrency exchange that emphasizes its compliance efforts and the need for a diverse exchange ecosystem. Indian exchanges will face a downshift due to Binance backing in India. Binance is the whole ecosystem that covers whole trading aspects of the cryptocurrency market. Binance will be quite dominating in the Indian exchanges because of its global efforts and now Binance has re-assured to comply with full regulatory norms. This will increase trust among the users to trade with the Binance. 

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