Crypto exchange Binance has seen the number of users from Indian rise significantly, after taxes were levied on crypto transactions by the Indian government.
However, some crypto exchanges based in India reported reduced daily trading volumes after the tax rules came into effect. These volumes have declined by more than 90%.
According to a report from Bloomberg on Tuesday, the number of users signing up on crypto exchange Binance from India has soared significantly.
This occurred after a tax deducted at source (TDS) of 1% had been implemented in India back in July. The publication reported that there was a rise in the number of Binance app downloads in August.
This figure climbed to 429,000 in India and it is the highest number to have been recorded in this year so far. In contrast, the daily trading volumes of crypto exchanges based in India have declined.
Since the 1% TDS was put into effect, Indian crypto exchanges have seen their daily trading volumes fall by as much as 90%.
SEBA Bank AG is based in Switzerland and its subsidiary is named SEBA India. Its chief executive, Rohan Mishra, discussed the new tax.
He stated that the new tax regulation did not clarify if the 1% TDS is applicable to crypto derivatives transactions that include futures in the same way as it does to crypto spot transactions.
Other than the 1% tax deducted on source (TDS), there is also a 30% tax that is applicable on gains derived from crypto assets.
Furthermore, people are no longer permitted to set off their losses in crypto trading against any income they generate via these assets.
Apart from that, the Indian banking system is also offering limited support to crypto exchanges in the country, which has made it immensely difficult for traders to move their money in and out of these platforms.
FTX, which is another foreign-based crypto exchange, also saw downloads of its app in India rise since January, but not that much after July.
In January, its app was downloaded about 40,000 times, while downloads in July were 96,000 and that in August were 52,000.
Coinbase Global Inc., on the other hand, saw its Indian app downloads decline in August to 16,000, while they had stood at 31,000 in June.
The Nasdaq-listed exchange had attempted to expand its operations in India back in April, but the UPI payment system had given it some trouble.
As for Indian exchanges, their user sign-ups have declined significantly. In January, local crypto exchange Coindcx had 2.2 million downloads, but they fell to 163,000 in August.
Likewise, Wazirx, another local crypto exchange saw its number of downloads come down from 596,000 to 92,000 from January to August.
The exchange was also embroiled in a public dispute recently with Changpeng Zhao (CZ), the CEO of Binance, on the topic of its ownership.
Binance’s chief executive had responded by urging people to transfer their funds from Wazirx to Binance, as the former’s bank accounts were frozen by ED in early August, but were recently unfrozen.