India Not A Crypto-Friendly Environment: Binance CEO

In scathing criticism, crypto exchange Binance’s chief executive officer (CEO) and founder Changpeng Zhao has reportedly called India an unfriendly crypto environment. 

Blaming the heavy taxation regime, Zhao said that the current Indian market was not a viable proposition for global players. He said, “If you are going to tax 1% on each transaction, there is not going to be that many transactions.”

Zhao was referring to the 1% tax deducted at source (TDS) imposed by the government on crypto transactions, which came into effect in July this year. 

Lashing out at the government, he said that levying heavy taxes on each transaction was resulting in lower tax accumulation broadly. 

“A user could trade 50 times a day and they will lose like 70% of their money. There is not going to be any volume for an order book type of exchange. So we don’t see a viable business in India today. We just have to wait. We are in conversation with a number of industry associations and influential people and trying to put some logic there,” said Zhao while speaking at the TechCrunch crypto conference on November 17.

Reiterating his stance, he said that the crypto exchange only operates in countries with pro-crypto and pro-business regulations. Zhao also rubbished concerns that Binance saw less potential in the country owing to its troubled dealings with homegrown crypto exchange WazirX.

The two sides were the subject of a public fallout that erupted after the Enforcement Directorate landed at the doors of WazirX in a money laundering probe. At the centre of the drama was a failed 2019 acquisition bid of WazirX which saw both Zhao and Nischal Shetty (WazirX cofounder) fight it out publicly.

Non-Conducive Regulatory Environment?

This is not the first time that CZ has publicly lashed out against the crypto environment in the country. Earlier this month, Zhao said that high taxes on cryptocurrency transactions could potentially ‘kill the industry’ in India. 

Echoing a similar but covert sentiment, Binance’s executive director of investments, Ken Li, earlier told Inc42 that the implications of the crypto taxes in the country were still not clear. 

The statements come amidst implicit measures introduced by the Indian government to dissuade retail crypto investments in the country. Besides the 1% TDS, the union government also imposed a 30% tax on gains from cryptocurrencies, which came into effect beginning April this year. 

While Finance Minister Nirmala Sitharaman has sought a global coalition to regulate cryptocurrencies, the Reserve Bank of India (RBI) has called for an outright ban of cryptos citing a threat to macroeconomic financial stability. 

Piling on this is the lack of a consolidated regulatory framework to govern the crypto space which currently has no safeguards for retail investors. The government crackdown on the space has also seen popular crypto exchanges such as CoinSwitch Kuber and CoinDCX come under the ED’s scanner. 

The tightening regulatory noose comes at a time when the collapse of Binance’s rival FTX has grabbed news headlines across the globe. The markets have also been reeling under the pressure of crypto funding which has wiped off trillions of dollars in investor wealth. 

The ensuing aftermath has steered many towards course collection as many exchanges look to gain the trust of their customers. Considering the upheaval in the crypto space, it remains to be seen how long before the government intervenes and brings in laws to regulate the industry.