To avoid taxes, traders leave Indian cryptocurrency exchanges for Binance

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To avoid taxes, traders leave Indian cryptocurrency exchanges for Binance

The aftermath of a significant tax shift has led billionaire Chief Executive Officer Changpeng Zhao of Binance Holdings Ltd. to strengthen his control over the Indian cryptocurrency trading business.
According to market intelligence company Sensor Tower statistics, downloads of Binance’s app in India increased to 429,000 in August, the most considerable number this year and nearly treble that of second-place CoinDCX.

Only Binance saw more downloads in India among the leading exchanges than in July.

In a market where competitors are struggling due to high taxes and the difficulties of getting money into and out of trading venues, the owner of the biggest cryptocurrency exchange in the world stands apart.

Since a 1% tax on cryptocurrency transactions went into force in July, daily volumes at important India-based platforms have decreased by more than 90%.

While Mr. Zhao has surpassed rivals with affordable fees, a wide range of offerings, and a well-known peer-to-peer marketplace that facilitates the exchange of tokens and cash, another aspect is the difference between how foreign exchanges and those with Indian roots handle the transaction tax imposed on domestic residents.

According to multiple users of the applications who wished to remain anonymous since the issue involves tax legislation, Indian-origin platforms have started to deduct the duty. In contrast, many of its international competitors, including Binance and FTX, haven’t. This has caused investors to transfer to the latter.

Traders can see a gap in slack regulation and a grey area over whether the law applies to more complex transactions.

According to Rohan Misra, CEO of SEBA India, a branch of SEBA Bank AG in Switzerland, “the current tax rule is not clear on whether the 1% tax deducted at source extends to crypto derivatives transactions including futures, as it does to crypto spot transactions.”

In answer to inquiries about whether it has already begun collecting the tax, a spokeswoman for Binance stated that it “is presently monitoring the situation and will make further statements in due time.”

FTX declined to comment, while inquiries sent to the Indian Finance Ministry went unanswered.

The rise of Binance coincides with a rare public spat with WazirX, its Indian partner, which prompted Mr. Zhao to urge WazirX users to switch to Binance.

WazirX’s monthly downloads decreased from roughly 596,000 in January to 92,000 in August.

The new 30% tax on profits from the transfer of crypto assets, harsher than in many other countries, including the US and the UK, was added on top of a new 1% tax known colloquially as the TDS.

This year’s regulations also prohibit offsetting losses from cryptocurrency trading against income. Additionally, the banking system’s limited support makes it challenging to fund accounts and convert from tokens to fiat cash.

In contrast to reductions for most participants, the Binance app has a more extensive adoption. For instance, according to Sensor Tower statistics, CoinDCX downloads decreased from 2.2 million in January to 163,000 in August.

From roughly 40,000 downloads in January to over 96,000 in July and 52,000 in August for billionaire Sam Bankman-FTX. Fried’s

Coinbase Global Inc., a San Francisco-based company, claims to adhere to crypto transaction taxes regulations. Downloads in India decreased from approximately 31,000 in June to 16,000 in August.

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