Binance has suspended cash payments for peer-to-peer (P2P) trading in India to adhere to regulatory compliance and enhanced security, 99 Bitcoins reported. While cash transactions have been convenient for users in regions with limited banking access, Binance aims to mitigate money laundering risks and promote a safer trading environment through this action.
The crypto exchange assured users in the region that alternative payment methods like bank transfers and digital wallets remain available. Despite mixed reactions from industry experts, concerns linger regarding potential effects on trading volumes and liquidity, particularly in cash-centric regions.
The alternative methods offered by the exchange reportedly align with regulatory requirements, reducing the risk of illicit activities and reinforcing Binance’s commitment to compliance. The decision highlights a broader trend of increasing regulatory scrutiny within the cryptocurrency industry.
FIU clarified that despite being registered, Binance must continue with compliance proceedings until the penalty is finalized. Other platforms like Kraken, Gemini, and Gate.io are negotiating with the regulators to ensure compliance with Indian regulations, while OKX and Bitstamp have proposed exiting the country altogether.
India’s Crypto Landscape
India’s stance on cryptocurrencies remains uncertain, with fluctuating market conditions and regulatory ambiguity causing uncertainty among traders. Despite being a priority during India’s G20 Presidency in 2023, the country has yet to implement its own legislation, keeping a crypto bill on hold since 2021. With over 19 million cryptocurrency investors and growing interest, India presents both opportunities and challenges for crypto exchanges
In April, Binance announced that it was contemplating returning to the Indian market following its forced exit in January due to regulatory non-compliance. The exchange faces a $2 million penalty but maintains India is a lucrative market.
In January, Indian authorities cracked down on nine crypto exchanges, including Binance, citing violations of anti-money laundering laws. The move led to removing these exchanges’ mobile apps from major app stores and blocking their websites in the country. Despite the setback, Binance acknowledged India’s significant market, expressing the willingness to pay the hefty fine.