India’s crackdown on the cryptocurrency market over the last year is helping foreign exchanges at the cost of local exchanges. As per the latest reports, crypto exchange Binance is expanding its footprint in the Indian market.
This happens as Indian crypto traders flee to foreign exchanges to avoid the hefty 1% TDS on crypto transactions. This 1% tax comes atop the 30% tax made on crypto gains. During the last month of August 2022, the downloads for the Binance app jumped to 429,000, as per data from market intelligence firm Sensor Tower.
India’s steep taxes and difficulty in moving funds have pulled Indian crypto investors towards Binance. Since the 1% tax came into effect in July, the daily transaction volumes on the Indian crypto exchange tanked by 90%. On the other hand, foreign peers of Indian exchanges have been making strong expansions in India.
This is because exchanges like Binance and FTX haven’t been deducting taxes on crypto transactions. Thus, it is serving as a strong catalyst for Indian investors to flee to foreign exchanges. Rohan Misra, chief executive officer at SEBA India told Bloomberg:
“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”.
A Binance spokesperson said that they are currently monitoring the situation and will make further announcements in due course.
Binance’s Spat With WazirX
Binance entered into a spat with India’s most popular crypto exchange WazirX following an ED investigation. While WazirX claimed to have the support of Binance, the latter distanced itself from it. This caused WazirX customers to flee to Binance. WazirX’s monthly downloads dropped from 596,000 in January to 92,000 in August.
Furthermore, with banks suspending their associations with WazirX, it has led to a further drop in the fund’s inflow at the exchange. In addition to Binance, Sam Bankman-Fried’s FTX exchange 96,000 downloads in India in July and 52,000 in August. This was up from 40,000 downloads in January.