Binance CEO Changpeng Zhao is tightening his grip on India’s market for cryptocurrency trading as a major tax change comes into effect that requires Indian investors to pay 1% TDS on crypto transactions, implemented in July 2022.
Lately, Indian crypto traders have opted for foreign market investments instead of investing in Indian crypto exchanges. Bloomberg has reported that the downloads of the Binance app in India jumped to 429,000 in August, the highest this year.
Binance is among the top exchanges that have achieved higher downloads in India, because while many Indian-origin platforms began deducting the levy, other foreign rivals such as Binance and FTX Trading Ltd did not, prompting many to make the switch to their platforms.
According to the report, daily volumes at key India-based platforms are down over 90% since a 1% tax on crypto transactions took effect in July.
Rohan Misra, CEO at SEBA India, a subsidiary of Swiss-based SEBA Bank AG, told Bloomberg that “the recent tax regulation is not explicitly clear on whether the 1% tax deducted at source extends to crypto derivatives transactions involving futures, as it does to crypto spot transactions.”
Thus, traders see a loophole in tax enforcement.
Why Are Traders Switching to Binance?
Data from market intelligence firm Sensor Tower shows that Binance, operator of the world’s largest crypto exchange stands out in the market, while runner-up CoinDCX struggles to catch up.
CoinDCX downloads, for example, shrank to 163,000 in August from 2.2 million in January, Sensor Tower data show.
Binance is also known to offer low fees, varied offerings, and a popular peer-to-peer marketplace that allows easier movement between tokens and cash.
Recently, Binance encouraged WazirX customers to defect to Binance as well. The announcement was made by Zhao personally on Twitter after a spat between him and WazirX co-founder Nischal Shetty about the rights of Binance over WazirX. WazirX’s monthly downloads tumbled to 92,000 in August from about 596,000 in January.
On the Flipside
- Binance’s edge in India, like other foreign platforms, may be lost if the government decides to fix the loophole of charging 1% TDS on Indian exchange platforms.
Why You Should Care
The 1% tax charge on crypto transactions came on top of a new 30% tax on gains from the transfer of crypto assets. The Indian government seems to be getting stringent with regulations around crypto transactions, as some of the new rules introduced this year include barring crypto trading losses from being offset against income.
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