Indian crypto traders move to Binance and FTX because Indian crypto exchanges have started to deduct the levy but Binance and FTX have not.
Changpeng Zhao, crypto platform Binance’s CEO, is serious about securing its position in the Indian market for crypto trading owing to a shift in the tax structure in India.
Binance currently has an edge over its competitors in the Indian market because it doesn’t include the high taxes or difficulty in moving money in and out of the trading platforms.
The number of downloads of the Binance app in India has increased to 429,000 in the month of August.
It has been the highest this year and is close to triple that of the second-ranked CoinDCX, according to data from market intelligence firm Sensor Tower.
In addition, Binance remains the only top exchange that has achieved higher downloads in India as compared to the month of July.
This also indicates that Binance has witnessed substantially high growth in popularity in India this year. This gain in popularity can be directed toward the major tax change that India witnessed this year itself.
Binance happens to offer lower fees along with other offerings and a popular peer-to-peer marketplace that allows seamless movement between tokens and cash as compared with the Indian exchanges.
Indian Platforms To Lose Out Owing To Deduction Of Levy
Indian crypto exchanges that belong to India have started to deduct the levy, but foreign platforms such as Binance and FTX have not started to do that.
This has simply caused investors to make a switch to foreign platforms such as Binance and FTX, as mentioned by users of the apps, stating reasons which were purely related to matters of tax law.
Many traders may find a loophole in tax enforcement and a grey area where the law applies to more complex transactions.
Binance happens to be the world’s largest crypto exchange, and it is choosing a different path compared to its rivals, who are dealing with increased taxes along with issues in moving money in and out of the trading venues.
Daily trading volumes on India-based crypto platforms are down by 90% since the 1% tax on crypto transactions took place in the month of July this year.
Binance has no doubt outmaneuvered Indian competitors with low fees and a better peer-to-peer marketplace.
The other very important factor has to be the difference in how foreign exchanges handle transaction taxes imposed on domestic residents as compared to Indian exchanges.
There Remains Less Clarity On Crypto Tax In India
The recent tax regulations in India are still unclear and also ambiguous regarding a lot of aspects.
Rohan Misra, chief executive officer at SEBA India, mentioned,
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.
According to Binance, it “is currently monitoring the situation and will make further announcements in due course,” stated a spokesperson, who said this is a response to questions pertaining to collecting the levy.