Changpeng Zhao (CZ), co-founder and CEO of Binance, termed India an unviable market for crypto trading due to high taxes. CZ said a 1% transaction tax on every transaction is extremely high and that makes crypto trading prohibitively expensive. He made these observations while speaking at the TechCrunch Sessions: Crypto 2022 in Miami yesterday.
“If you are going to tax 1% on each transaction, there is not going to be that many transactions… To be honest, I don’t think India is a very crypto-friendly environment… A user could trade 50 times a day and they will lose 70% of their money. There is not going to be any volume for an order book type of exchange. So we don’t see a viable business in India today,” Binance CEO said in Miami.
The 1% transaction tax became effective on 1 July 2022 and it led to a massive fall in trading volume across all Indian crypto exchanges. The fall was above 90% in most cases. Apart from a 1% transaction tax, a 30% income tax on all crypto transfers is levied. In addition to this, there are regulatory issues that call for stricter KYC compliance and an in-built security mechanism.
“Binance goes to countries where regulations are pro-crypto and pro-business. We don’t go to countries where we won’t have a sustainable business — or any business, regardless of whether or not we go,” CZ told the panel.
However, Binance is available to Indian users and it saw a dramatic spurt in downloads of its app in August, a month after the transaction tax was introduced. The Binance app saw 429,000 downloads in August, the highest for the year. It was attributed to an exodus of investors from Indian exchanges fearing tax complications and moving to foreign exchanges that did not disclose if they were going to follow the tax rule or not.
CZ concluded that he has not completely given up on India and said that Binance is engaged with industry associations and industry influencers to put logic in India’s tax policies for the crypto sector.
