CZ Binance Hints At Rising Taxation Being Detrimental To Indian Crypto Industry

The Indian government has maintained a bullish stance on its income tax on crypto assets. The government demonstrated this with the proposal of a cryptocurrency and the regulation of the Official Digital Currency Bill in 2021. However, cryptocurrencies and NFTs are currently unregulated in India. The RBI even tried to ban cryptocurrencies in 2018.

Although the proposed “Cryptocurrency and Digital Currency Official Bill Regulation” was never implemented, the government’s stance on cryptocurrencies is still unclear. However, while still weighing its stance, the Indian government implemented a new law to tax earnings and income from virtual digital assets (VDAs).

The new tax policy focused on the Singapore Fintech Festival (SFF) that took place from November 1 to 4. At the event, Binance CEO Changpeng Zhao (CZ) pointed to high tax rates as a killer of the crypto industry.

The Singapore Fintech Festival is one of the most anticipated events in the cryptocurrency and Fintech industry. The event has more than 60,000 participants and 850 speakers representing banks, global financial services firms and policy-making bodies.

Cryptocurrency Exchanges Face Decline in Volume Due to High Taxes

During a panel discussion at the SFF event, CZ said that the new crypto tax in India, which came into effect in April, may kill the industry. This is because the tax is outrageously high, with a 30% capital gains and 1% transaction tax on all digital asset transactions. Local cryptocurrency exchanges have reported a 90% decline in trading volume since the policy went into effect in April.

Apart from the high tax rates, the government tightened the regulatory processes. Crypto platforms now have to follow more extensive security and Know Your Customer (KYC) approaches.

In 2019, Binance acquired an Indian crypto exchange called WazirX. However, there was a recent issue related to the frozen assets of WazirX. In a brief discussion between CZ and the CEO of WazirX, CZ revealed that Binance never completed its deal with the embattled cryptocurrency exchange. Instead, the CEO stated that Binance only provided wallet services to WazirX as technology solutions.

What by reportsWaxirZ is experiencing a decline in sales volume and laid off 40% of its workforce in October.

India may introduce more fiscal policies

Earlier this week, India’s Central Board of Direct Taxes (CBDT) proposed a reformed common ITR form. The board intends to introduce the new form as a replacement for some series of ITR forms. The draft ITR form contains fields that require information on foreign companies with a user base in India.

Some tax experts commented on this move. They said it is an attempt to include digital assets and Web3 companies incorporated outside of India in tax policy. However, the last nasscom report stated that India has over 450 crypto and Web3 startups.

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But 60% of the 450 startups are registered in crypto-friendly countries with clear regulatory models.

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