Binance Gains Approval to Operate in India, Becomes Second Offshore Crypto Exchange Cleared by FIU

Binance, the global cryptocurrency exchange, has recently obtained approval from India's Financial Intelligence Unit (FIU), allowing it to offer services in the country. This makes Binance the second offshore exchange to receive such regulatory clearance, following KuCoin.

Approval from the FIU marks a significant milestone for Binance, as it faced regulatory challenges along with other major exchanges in December 2023. Indian authorities issued non-compliance notices to exchanges like Huobi, Kraken, and Gate.io, leading to access blockades by the country's IT department in January 2024.

While some exchanges chose to cease operations in India, Binance and KuCoin pursued compliance with FIU requirements to continue their services. This move comes amidst India's stringent tax laws on cryptocurrency, including a 30% tax on gains and a 1% tax deduction on each transaction.

The heavy tax burden prompted many Indian investors to turn to foreign exchanges like Binance, which at its peak, handled 90% of India's crypto trading volume. However, the migration of traders and businesses abroad has posed challenges for remaining exchanges in India, impacting investor trust and banking solutions.

Despite these hurdles, India remains a key market for major cryptocurrency exchanges. However, regulatory uncertainty and tax measures have dampened its appeal on the global stage.

Cointelegraph reached out to both Binance and FIU for comments but has yet to receive a response.

The regulatory hurdles and heavy tax burdens in India have posed significant challenges for cryptocurrency exchanges, hindering their operations and impacting investor trust.