The Indian government imposed another 1% transaction tax on crypto trading in July after the initial 30% levied on trading gains three months earlier. The local crypto trading platforms have recorded a fall in trading activities while the volume of Binance Indian users surged.
Increased Application Downloads
A top digital assets trading platform, Binance, recorded an increased volume of users since the Indian government started charging a 1% transaction tax, called tax deducted at source (TDS), on digital assets’ trading in the country.
Bloomberg report reveals that Binance hit this year’s highest number of Indian users registration since the implementation of the TDS. Binance trading application downloads in India surged to over 420,000 last month.
Although Coinbase, another top trading platform, recorded a fall in the downloads of their application, FTX recorded an increase since January, but this has flipped since July.
Meanwhile, Coinbase downloaded applications fell from about 31,000 in June to 16,000 last month. FTX similarly recorded about 52,000 downloads the previous month, a fall against 96,000 recorded in July.
TDS Adversely Affects Top Indian Platforms
Despite warnings that the TDS will adversely affect the developing cryptocurrency market in India, their finance minister insisted it is for tracking transactions. Consequently, the top local trading platforms in the nation recorded more than a 90% drop in trading activities since the implementation of the tax.
The TDS, coupled with the 30% tax on spot trade gains, has affected the young crypto market. The 30% gain tax disallows offsetting losses against gains. The financial system is another obstacle as it doesn’t support the free flow of funds between exchanges and banks.
Top Indian-based platforms recorded falls in applications downloaded since the advent of the levies, despite Binance’s surge. According to Sensor Tower data, CoinDCX, a leading Indian-based platform, recorded around 2.2 million downloads at the beginning of the year. However, it recorded 163,000 last month.
Another top Indian digital asset platform, Wazirx, also recorded a fall in application downloads. The exchange, which clashed with Binance concerning acquisition issues, recorded 92,000 downloads last month compared to January’s 596,000. Also, the country’s Enforcement Directorates released Wazirx accounts this week after freezing them early last month.
Rohan Misra stated that they are still unsure if the 1% TDS will affect just the gains on spot trades or if gains from trading futures are also affected. Rohan is the CEO of SEBA India.
Binance is still observing the development and will soon disclose its plans concerning charging taxes on trading activities.
