Binance’s South Asia spokesperson said on May 21, 2026 that no Indian law, regulation, directive, or guideline prohibits users from withdrawing crypto from centralized exchanges to personal wallets. The remark, shared with The Economic Times, immediately sharpened a long-running debate in India’s crypto market. On paper, withdrawals are allowed. In practice, many users still run into delays, repeated KYC requests, or outright restrictions when trying to move assets off domestic platforms.
Binance says compliance and self-custody access can coexist
Binance India operates under FIU-IND registration and says it reports withdrawal data to authorities while still allowing transfers to self-custody wallets. The exchange also said it serves roughly 50 million to 100 million users in India, arguing that full compliance does not require blocking asset withdrawals.
That stands in contrast to the experience reported by users of local exchanges such as CoinDCX and WazirX. According to the source material, many customers trying to send crypto to an external wallet face long review times, extra identity checks, or direct denial. Unocoin is cited as a platform with looser transfer access, but as an exception rather than the norm. The result is a split between legal reality and what users actually experience on the ground.
Local platforms point to AML risk and banking pressure
Domestic exchanges justify tighter controls by citing the Prevention of Money Laundering Act. Their position is that unrestricted outflows can raise money laundering risk and complicate relationships with banking partners that already classify crypto-linked activity as high risk. Banks remain cautious, and exchanges are reacting to that caution.
In effect, platforms are adopting restrictions that go beyond any explicit national ban. The source frames this as over-compliance in a legally grey environment: exchanges are tightening withdrawal policies to protect banking access and reduce exposure to regulatory scrutiny, even though the law itself does not clearly prohibit withdrawals to personal wallets.
India’s 2026 crypto framework remains incomplete
India still does not have a dedicated digital asset law in 2026. Crypto is legal, but gains are taxed at a flat 30%, and every transfer is subject to 1% TDS. The proposed regulatory discussion paper mentioned in the source has been delayed and shelved, leaving the market governed by partial rules rather than a single comprehensive framework.
Authority is also fragmented. The Reserve Bank of India has historically opposed cryptocurrency, while FIU-IND handles AML registration for virtual digital asset service providers. Areas such as DeFi, NFTs, staking, and cross-border flows still lack clear guidance. On May 20, 2026, the Standing Committee on Finance met with Binance, WazirX, and ZebPay to discuss virtual digital asset policy, illicit use, and capital outflows. No concrete new regulation followed that meeting.
Taxes and withdrawal friction are pushing users elsewhere
The source says that after the 30% tax and 1% TDS took effect in 2022, billions of dollars in trading volume shifted to offshore platforms. For active traders, lower friction and clearer withdrawal rules have made global exchanges more attractive than domestic venues. Users who remain on local platforms report repeated KYC demands, blocked transfers, and dependence on P2P channels that carry their own risks, including frozen accounts and scam exposure.
That pressure has helped drive interest in hardware wallets and self-custody. Rather than reducing demand for off-exchange storage, tighter withdrawal policies appear to be strengthening it among users who want direct control of their assets and private keys.
Rupee weakness makes the debate more sensitive
The withdrawal issue is unfolding as the rupee faces heavier pressure. The source says the currency has fallen near record lows of 96 to 97 per US dollar in 2026, with $17 billion to $19 billion in foreign institutional investor outflows and oil prices above $120 a barrel adding to the strain. The RBI is reviewing options including rate hikes, currency swaps, and overseas dollar mobilization, and a $5 billion swap auction is scheduled for May 26, 2026.
In that setting, open crypto withdrawals combined with stablecoins such as USDT can be seen as a channel for moving value outside traditional remittance limits. That capital flight concern helps explain why banks remain cautious and why the RBI is watching the sector closely. The dispute, then, is not centered on a written ban. It sits at the intersection of exchange policy, banking risk, and an unfinished regulatory structure.