In the evolving crypto market, there’s no denying that the underbelly of regulations and lawfulness remains a significant topic. One of the star players that have been under close scrutiny is the world-renowned cryptocurrency exchange Binance. The exchange, celebrated for its vast global reach, is attracting the attention of Indian trade enthusiasts, thereby acting as a steppingstone in further integrating cryptocurrency into the Indian payment infrastructure.
While the premise of enabling traders to buy and sell cryptocurrencies using Indian rupees (INR) sounds promising, the mechanism involved is somewhat unclear. Apparently, Binance – the mediator runs an ‘escrow service’, pairing local traders in an offshore marketplace. Transfers are expedited via local bank accounts or even common services like Google Pay, and the transactions are settled in INR.
The ‘neutrality’ and lawfulness of these transactions hinge on the fact that Binance doesn’t hold any rupee bank accounts nor is it providing any recognized legal tender. Indian regulators, cognizant of these activities, haven’t stamped them as a breach of law. However, the inherent anonymity of the trading process poses some prevalent questions.
Local traders on Binance platform, while not technically violating any law could potentially infringe upon exchange control rules due to their advertising techniques. Plus, the anti-money laundering guidelines cast further shadows on this matter. It’s easy for a trader to sell crypto from his wallet opened with Binance, to another buyer in India. This process, buried in obscurity, continues sans tax payment yet further catalyzing trade activities some of which have turned out to be quite sizable.
The ease of this offshoring crypto transactions also witnessed Indians shifting their crypto holdings to wallets with international exchanges. A recent study by Esya Centre, uncovered that Indians moved over $3.8 billion in trading volume to these exchanges post the introduction of strict crypto tax rules. This remarkable shift further exacerbated the drop in local exchange activity, contracting it to a mere 10% in 2022.
The implication of these activities remains a contentious issue, highlighting the fact that the crypto market may benefit from clearer and more comprehensive regulations in the future. No doubt, there are praises to be sung about the potential for Binance to connect Indian traders to a global platform. Yet such progress should be tempered by a thoughtful awareness of the regulatory, market, and legal variables in play.
Source: Cryptonews
