Crypto traders flee India exchanges to Binance to escape tax

Bloomberg

Binance Holdings Ltd’s billionaire Chief Executive Officer Changpeng Zhao is tightening his grip on India’s market for cryptocurrency trading in the fallout from a major tax change.
Downloads of Binance’s app in India jumped to 429,000 in August, the highest this year and almost triple that of runner-up CoinDCX, data from market intelligence firm Sensor Tower show. Only Binance among the top exchanges achieved higher downloads in India compared with July.
The operator of the world’s largest crypto exchange stands out in a market where rivals are reeling from steep taxes and the difficulty of moving money in and out of trading venues. Daily volumes at key India-based platforms are down over 90% since a 1% tax on crypto transactions took effect in July.
While Zhao has outflanked competitors with low fees, varied offerings and a popular peer-to-peer marketplace that allows easier movement between tokens and cash, another factor is the contrast in the way foreign exchanges and those with Indian roots handle the transaction tax imposed on domestic residents.
Indian-origin platforms have begun deducting the levy but many foreign peers like Binance and FTX haven’t, prompting investors to switch to the latter, according to several users of the apps who asked to remain anonymous given the matter relates to tax law.
Traders may see a loophole in lax enforcement and a gray area over 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, chief executive officer at SEBA India, a subsidiary of SEBA Bank AG.
Binance “is currently monitoring the situation and will make further announcements in due course,” a spokesperson said in response to questions about whether it has started collecting the levy. FTX declined to
comment and India’s Finance Ministry didn’t respond to emails seeking comment. Binance’s gains come amid a rare public spat with WazirX, its partner in India, which led Zhao to encourage WazirX customers
to defect to Binance.