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According to the CEO of Binance, the cryptocurrency market in India is not sustainable
Over the past two years, venture capital firms specializing in cryptocurrencies have flocked to India, but according to Binance CEO Changpeng Zhao, the cryptocurrency exchange does not consider India as a promising market for expansion. Zhao was quoted as saying, “To be honest, I don’t think India is a very crypto-friendly climate.” Zhao is not the only individual with such a pessimistic outlook on the Indian market, claims TechCrunch. Zhao’s statement is important because, despite scores of investors and startup entrepreneurs privately expressing such concerns, no other person of Zhao’s prominence has publicly voiced a similar opinion. Zhao attributed the market’s lack of accessibility to the high tax climate in the nation.
“There is not going to be that many transactions if you are going to levy 1% on each transaction,” he added. According to the article, Binance, the world’s largest cryptocurrency exchange by volume, is currently open to users in India. “A user might make trades 50 times a day and still lose about 70% of their capital. A form of exchange with an order book won’t have any volume. Thus, we do not now envisage a profitable business in India. All we can do is wait. We are attempting to provide some rationale there in our conversations with various industry associations and powerful figures, said Zhao.
Zhao expressed his concern, saying, “We are attempting to get this message out, but tax regulations normally take a long time to modify.” India put into effect a law for taxing virtual currencies earlier this year. Any income from the transfer of a virtual asset is subject to a 30% tax. The government deducts a 1% tax at the source from payments made for the purchase of virtual assets in order to keep track of all such crypto transactions.
Other international cryptocurrency exchanges, such as Coinbase, which is listed on Nasdaq, have attempted to open in India. In April, the exchange attempted to open in India, but operations were quickly suspended. In May, Brian Armstrong, CEO of Coinbase, said that the Reserve Bank of India had put “informal pressure” on the company to stop supporting the UPI local payments system.
Although bitcoin transactions and income are taxed, India currently lacks a regulatory framework. Cryptocurrency regulation would be one of the issues of focus during India’s G20 presidency, according to Nirmala Sitharaman, the Indian finance minister. After discussing it with other G20 nations, the administration intends to create a tech-driven regulatory framework for cryptocurrencies.