Binance fined US$2.2 million by Indian Financial Intelligence Unit: Stay compliant, say industry experts

Binance, the world’s largest cryptocurrency exchange, which was suspended from operating in India in December 2023 for failing to comply with the country’s anti-money-laundering rules, received a notice on Wednesday from India’s Financial Intelligence Unit (FIU-IND), fining the crypto platform US$2.25 million (INR18.8 crore) for inability to comply.

This means to operate in India, Binance must cough up the massive fine.

The notice, as quoted by Mint says, “Specific directions have been issued to Binance to ensure diligent compliance with the obligations outlined in Chapter IV of PMLA.”

The news has made the crypto industry sit up and take notice once more. Many from the industry are emphasizing the importance of regulation and compliance in this volatile industry.

Dilip Chenoy, Chairman, Bharat Web3 Association, said, “We, at BWA, believe that a clear and well-defined compliance framework plays an essential role in ensuring the responsible growth of the Web3 industry in India. We call upon all industry participants to strictly adhere to laws related to anti-money laundering (AML) and combating the financing of terrorism (CFT).”

We, at BWA, believe that a clear and well-defined compliance framework plays an essential role in ensuring the responsible growth of the Web3 industry in India. We call upon all industry participants to strictly adhere to laws related to anti-money laundering (AML) and combating the financing of terrorism (CFT)
Dilip Chenoy, Chairman, Bharat Web3 Association

FIU-IND has emphasized that the compliance framework under the Prevention of Money Laundering Act (PMLA) applies to Virtual Digital Asset Service Providers (VDA SPs) serving Indian users, regardless of their domicile.

“The obligations are activity-based rather than dependent on physical presence in India, highlighting the objective to track and trace fraudulent activities effectively,” he added.

Since India is a lucrative market for global brands with a large representation of the young and ambitious demographic along with an increasing set of seasoned investors, it becomes highly critical for regulators to protect the interests of users and consumers in every sector, says Manhar Garegrat, Country Head India & Global Partnerships, Liminal Custody.

The developments we are observing with FIU-IND related to Binance are very organic and are a significant pointer towards India’s progress on regulating the digital assets markets in India. A common regulation for all stakeholders and businesses – local and global – would ensure a level playing field for industry players and would provide equal growth opportunities to all the relevant stakeholders of the industry
Manhar Garegrat, Country Head India & Global Partnerships, Liminal Custody

“The developments we are observing with FIU-IND related to Binance are very organic and are a significant pointer towards India’s progress on regulating the digital assets markets in India. A common regulation for all stakeholders and businesses – local and global – would ensure a level playing field for industry players and would provide equal growth opportunities to all the relevant stakeholders of the industry,” he says

Alongside the massive growth ETFs are seeing in the global investments space, the digital asset sector continues to grow significantly as well. According to a research report, India is one of the top countries in terms of digital assets ownership.

“In such a large digital asset market, it is imperative to implement a regulatory framework for the protection of user funds and for providing a friendly environment for businesses,” he added.

Shivam Thakral, CEO of BuyUcoin, India’s second-longest-running digital asset exchange, said, “This significant penalty is a clear indication of the increasing scrutiny and regulation in the digital asset space.”

Virtual Digital Asset service providers (VASPs) in India must collaborate to create a growth-oriented ecosystem for the digital asset industry. I strongly believe that constructive dialogue between the regulators and industry players will lead to a more mature and pro-consumer digital asset market in India
Shivam Thakral, CEO of BuyUcoin

He added that it’s essential to stay informed and aware of such developments to navigate this evolving landscape successfully.

“I believe that the regulations are getting more organised for crypto currency exchanges, globally. The need for compliance is critical for user protection and to conduct business in a fearless environment. Sustained efforts by FIU-IND will lead to a fertile ground for Web3 businesses to grow and enable India to become a $1 trillion digital economy,” he said.

“Virtual Digital Asset service providers (VASPs) in India must collaborate to create a growth-oriented ecosystem for the digital asset industry. I strongly believe that constructive dialogue between the regulators and industry players will lead to a more mature and pro-consumer digital asset market in India,” he advised.

Navanwita Bora Sachdev

Navanwita is the editor of The Tech Panda who also frequently publishes stories in news outlets such as The Indian Express, Entrepreneur India, and The Business Standard