Traders Flock to Binance as New Taxes Send Indian Exchanges Out of Business: Report

A Bloomberg report on Wednesday claimed that Binance app downloads in India jumped to 429,000 in August, the highest this year.

This comes just months after the country implemented stringent taxation on local exchanges.

Binance’s India Gains

Binance is the only one among the major exchanges whose app downloads had seen an increase in August over July, the month when 1% transaction tax in the form of TDS kicked in, a Bloomberg report said, quoting data from Sensor Tower, which tracks mobile and internet data to provide actionable intelligence to its clients.

Binance app downloads in India were three times those of CoinDCX, whose downloads stood at 163,000 for the month from 2.2 million in January. WazirX’s downloads dropped to 92,000 in August from about 596,000 in January.

FTX has seen its numbers falling to 52,000 in August from 96,000 in July, but still maintaining an upward trend since 40,000 in January. Coinbase app downloads are down to 16,000 in August from 31,000 in June.

Tax-Change Hits Volume

The provision of 1% transaction tax and 30% tax on crypto gain introduced in April, coupled with complexities of tax-reporting, drove traders away from Indian exchanges, bringing down the volume by about 90%.

But it seems it’s not entirely a loss for the crypto market, given the large number of Indian traders flocking to Binance. The world’s largest trading platform by volume did not clarify whether it’s deducting 1% TDS on all transactions as mandated by the recent change in taxation.

While Indian exchanges can’t escape tax compliance requirements, their foreign counterparts – Binance and FTX, in particular, have not been deducting the tax.

Ambiguity in Tax Compliance

A Binance spokesperson said it is monitoring the situation and will make further announcements in due course, the media report said, adding that FTX declined to comment while the Indian Finance Ministry did not respond to email queries in this regard.

Another factor that seemed to have worked in favor of Binance is low fees, attractive offerings, and a popular P2P marketplace where moving coins and cash is easier.

Indian traders flocking to Binance comes in the wake of a rare public spat between Binance CEO Changpeng Zhao and WazirX CEO Nischal Shetty. It seems the tax change and his distancing from WazirX have helped Binance stand out.