Binance Mandates KYC Rechecks in India

When India’s top cyber‑sleuths descended on the crypto sector last year, Binance found itself in the crosshairs. Investigators flagged missing tax data, the Financial Intelligence Unit slapped a ₹188 million fine, and Apple quietly booted Binance’s app from its India store. Twelve months on, the exchange is scripting a comeback—one PAN card at a time.

On April 18 Binance told its Indian clientele—new and old—to resubmit identity documents under a compulsory Know Your Customer re‑verification drive. The linchpin is the 10‑character Permanent Account Number (PAN) issued by India’s Income Tax Department. Without it, withdrawals will freeze and new accounts won’t open. “This requirement is not unique to Binance and equally applies to all local and global exchanges registered under India’s AML legislation,” the company noted on X.

Why the crackdown now?

New Delhi has toughened the Prevention of Money Laundering Act to cover digital‑asset platforms, demanding granular data on trades and counterparties. Exchanges must also collect 1 % Tax Deducted at Source (TDS) on every crypto sale—an unpopular rule traders frequently skirt by hopping offshore. Regulators suspect some users routed those trades through Binance, bypassing domestic gateways. The Income Tax Department has launched a forensics campaign to see whether TDS evasion runs into the billions.

Linking PANs at the exchange layer collapses that escape hatch. It lets officials match wallet addresses to taxpayer profiles, turning blockchain forensics into a turnkey compliance feed. For Binance, the overhaul signals a strategic shift: cooperate now, litigate never. After registering with the FIU in late 2024, the firm hired local AML officers and began quarterly audit reporting. The fresh KYC push is the final plank in a policy stack designed to prise open the Indian market—home to an estimated 110 million crypto users—without triggering another regulatory smack‑down.

User impact and security

Existing customers have weeks, not months, to upload new proofs. Binance insists data storage obeys ISO‑certified encryption and will not be repurposed for marketing. But some traders fear mission creep. “First they want PAN, next Aadhaar,” laments Mumbai‑based NFT artist Riya Sharma. Others welcome clarity: “I’d rather clear KYC once than see the app vanish again,” says quantitative fund manager Arjun Patel.

Industry peers are watching. Domestic rivals CoinDCX and WazirX already enforce PAN‑based onboarding; global giant OKX must decide whether to follow suit or risk sliding into grey‑market territory. Compliance consultancy Trilegal predicts that by year‑end, every exchange servicing Indian IP addresses will operate through FIU licenses or geo‑block the subcontinent entirely.

Binance’s re‑verification campaign is less a courtesy call than a regulatory ultimatum. Yet aligning with India’s AML framework could reopen app stores, thaw bank channels and reset trust after a bruising year. For Indian users, the question boils down to trade‑off: surrender extra data or cede liquidity to smaller domestic pools. Either way, the KYC genie is out of the bottle—and this time the PAN card is your ticket back in.