As a result of a significant tax change, billionaire CEO of Binance Chang Peng Zhao is tightening his control over the Indian cryptocurrency trading market.
The aftermath of a significant tax change has led billionaire Chief Executive Officer Chang Peng Zhao of Binance Holdings Ltd. to tighten his control over the Indian cryptocurrency trading market.
According to data from market intelligence company Sensor Tower, downloads of Biannca’s app in India increased to 429,000 in August, the highest number this year and nearly triple that of second-place CoinDCX.
Among the top exchanges, only Binance saw more downloads in India than in July. In a market where competitors are struggling due to high taxes and the difficulty of moving money into and out of trading venues, the owner of the biggest cryptocurrency exchange in the world stands out.
Since a 1% tax on cryptocurrency transactions went into effect 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 several users of the apps who asked to remain anonymous because the matter involves tax law, Indian-origin platforms have begun deducting the levy, but many foreign peers, such as Binance and FTX, have not, prompting investors to switch to the latter.
Traders may see a gap in enforcement and a grey area regarding whether the law applies to more complex transactions.
“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,” said Rohan Misra, CEO of SEBA India, a subsidiary of Switzerland-based SEBA Bank AG.
In response to inquiries about whether it has already begun collecting the levy, a spokesperson for Binance stated that it “is currently monitoring the situation and will make further announcements in due course.”
Binance “is currently monitoring the situation and will make further announcements in due course,” a spokesperson said when asked if it had begun collecting the levy.
FTX declined to comment, and the Indian Finance Ministry did not respond to requests for comment.
Biannca’s gains coincide with a rare public spat with WazirX, its Indian partner, which prompted Mr. Zhao to encourage WazirX customers to switch to Binance.
The 1% tax, known colloquially as the TDS, was imposed on top of a new 30% tax on gains from the transfer of crypto assets, which is higher than in many other jurisdictions such as the UK and the US.
This year’s rules also prohibit crypto trading losses from being offset against income. Furthermore, the banking system’s limited support makes it difficult to fund accounts or convert tokens to fiat currency.
The increased popularity of the Binance app contrasts with declines for the majority of other players. Sensor Tower data show that CoinDCX downloads fell to 163,000 in August from 2.2 million in January.
Billionaire Sam Bankman-FTX Fried’s received nearly 96,000 downloads in July and 52,000 in August, up from around 40,000 in January.
Coinbase Global Inc., based in San Francisco, has stated that it complies with the crypto transaction tax rules. Downloads in India fell to 16,000 in August, down from nearly 31,000 in June.