- The CEO of Binance believes that the 1% tax on cryptocurrency transactions is very onerous and detrimental to business.
- By charging high taxes, the Indian government seeks to limit the trading of digital assets in the country.
Binance CEO Zhao Changpeng has warned that India’s high taxes on cryptocurrency trading could end up destroying the crypto industry in the country.
“India has high tax, which is probably going to kill the industry,” Zhao said while speaking live on a panel at a fintech conference in Singapore on Thursday, according to Bloomberg.
Apart from Zhao, who has interests in India, other industry personalities have made similar comments related to the future of cryptocurrencies in India. Tax measures passed by the government this year led to a decline in digital asset trading.
Although India has been expected to introduce a comprehensive regulatory framework for cryptocurrency trading since last year, the government has preferred to impose onerous fees on earnings and transactions to limit their trading.
Binance is the leading cryptocurrency trading platform in India. In August, the app’s downloads jumped to 429,000. This triples CoinDCX, which follows it in the table of favorite exchanges, according to data from intelligence firm Sensor Tower.
Since the 1% tax on cryptocurrencies came into effect in July, its trading has fallen by roughly 90% on major India-based exchanges. Likewise, trading platforms have difficulties moving their money in and out of the country.
For this reason, Indian crypto exchange ZebPay plans to extend its growth abroad, CEO Avinash Shekhar announced in August. The executive was emphatic in stating that the transaction tax had to go down because “otherwise things are not going to improve.”
Binance has managed to get around these difficulties, allowing it to hog the lion’s share of the crypto pie. Their strategy has been to charge lower fees to users, increase and diversify offerings, and boost peer-to-peer trading to facilitate the movement of tokens and cash.
Also, foreign platforms operating in India are handling the 1% tax issue differently. While Indian platforms charge users for it, others like Binance and FTX do not.
On the Flipside
- Unlike China, which decided to ban cryptocurrency trading to reduce competition for the digital yuan, the Indian authorities chose to apply a very high tax rate to transactions to reduce their trade.
Why You Should Care
India ranks fourth globally in cryptocurrency adoption behind Vietnam, the Philippines, and Ukraine, according to data from Chainalysis. Although in this year’s Finder report, India appears as the leading country in digital asset adoption globally at 29%.