The number of Indian users of cryptocurrency exchange Binance has surged after the Indian government began taxing crypto transactions. Meanwhile, daily transaction volumes on several major India-based cryptocurrency exchanges have dropped by more than 90% since the new tax rules took effect.
Binance has a record number of users in India
Bloomberg reported Tuesday that the number of Indian user signups surged at global crypto exchange Binance after the 1% withholding tax (TDS) went into effect in July.
Downloads of the Binance app in India surged to 429,000 in August, the highest number this year, the publication added. Meanwhile, daily trading volumes at several major India-based cryptocurrency exchanges have reportedly dropped by more than 90% since the 1% TDS took effect.
Commenting on the new tax, Rohan Misra, CEO of SEBA India, a subsidiary of Switzerland-based SEBA Bank AG, said.
Recent tax legislation is not clear on whether the 1% withholding tax applies to crypto derivatives transactions, including futures, as well as crypto spot transactions.
The 1% TDS will be levied on top of the new 30% tax on profits from crypto assets. Additionally, losses from crypto trading cannot be offset against income. Indian crypto exchanges also face limited support from the banking system, making it difficult for users to move money in and out of their trading platforms.
Another foreign-based cryptocurrency exchange, FTX, has seen an increase in app downloads since January, but not since July. The exchange had about 40,000 downloads in India in January, almost 96,000 in July, and 52,000 in August.
However, Nasdaq-listed crypto exchange Coinbase Global Inc. saw its app downloads in India plummet from about 31,000 in June to 16,000 in August. Coinbase tried to expand its operations in India in April but soon ran into trouble with its UPI payment system.
While Binance’s app downloads surged, several major Indian cryptocurrency exchanges saw a drop in user sign-ups, the publication said. Data from market intelligence firm Sensor Tower showed that app downloads for Indian crypto exchange Coindcx fell to 163,000 in August from 2.2 million in January.
Another Indian crypto exchange, Wazirx, saw its monthly app downloads drop from about 596,000 in January to 92,000 in August. The exchange recently had a public dispute with Binance CEO Changpeng Zhao (CZ) over its ownership, with Zhao urging Wazirx users to move their funds to Binance; Wazirx’s bank accounts were frozen by the Indian Executive Directorate (ED) in early August but the freeze was lifted earlier this week.
As for whether Binance has begun collecting transaction taxes from Indian users, a spokesperson for the exchange told the news outlet that the company is “currently monitoring the situation and will make a further announcement shortly.”
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