Binance, a prominent cryptocurrency exchange, has decided to discontinue cash payments for peer-to-peer (P2P) crypto trades in India. The move aims to strengthen compliance measures and align with regulatory standards. Binance previously allowed traders to settle transactions using physical cash or bank deposits, but this flexibility has now been terminated. The decision reflects Binance’s efforts to establish greater legitimacy in the Indian market, which has faced increased regulatory scrutiny. While non-cash payment methods are still available for P2P trades in Indian rupees, the removal of the cash option represents a significant change in Binance’s operational approach. It is worth noting that Binance still permits cash payments for P2P trades in UAE dirhams (AED) in Dubai, where the city is positioning itself as a growing cryptocurrency hub. However, P2P cash transactions in India have been associated with risks, including physical and financial dangers. Binance’s decision to end cash payments is not technically in violation of Indian laws, as it acts as a third party providing escrow services for crypto transfers, which are not legally recognized as tender in India. Despite being banned in late 2023 and facing a potential penalty of $2 million, Binance has been considering re-entering the Indian market. The recent registration of Binance and KuCoin with the Financial Intelligence Unit of India (FIU-IND) marks a significant shift in credibility for the crypto industry in India. The ban on offshore entities, including Binance, KuCoin, Huobi, and Kraken, had a negative impact on the local crypto industry, leading to a shift in trading volumes to international exchanges. While KuCoin has resumed operations after paying a penalty, Binance is expected to settle a $2 million fine. Other sanctioned platforms are also negotiating their return, while OKX and Bitstamp plan to exit the Indian market. Prior to its ban, Binance held nearly 90% of the estimated $4 billion cryptocurrency holdings among Indian citizens, largely due to its non-compliance with Indian tax regulations. The 1% tax deduction at source (TDS) on transactions was not implemented by Binance in India.
