India’s anti-crypto policies came into clear perspective at the prestigious Singapore Fintech Festival held from November 2 to November 4, when the world biggest crypto exchange Binance’s CEO Changpeng Zhao (CZ) cited high tax rates as the cause of the collapse of the country’s budding crypto economy.
Singapore Fintech Festival (SFF) is one of the most anticipated events in the digital assets and fintech industry, with over 60,000 attendees and 850 presenters representing leading global financial institutions, banks, and governing agencies. During a live-streamed panel discussion at SFF, CZ stated:
“India has high taxes, which is probably going to kill the industry”.
Heavy crypto tax in India
According to media reports, he was referring to the implementation of new crypto taxes in April of this year. It is important to note that India imposed a 30% capital gains tax and a 1% transaction tax on practically all transactions involving digital assets. Since then, local cryptocurrency exchanges have reported a volume decline of up to 90%. The government has stiffened the regulation and supervision, requiring these platforms to adhere to more stringent standard KYC and security standards.
Interestingly, in 2019, Binance entered the local crypto market by announcing the plans to acquire local cryptocurrency exchange WazirX, but in a recent dispute with WazirX CEO Nischal Shetty, CZ disclosed that the transaction was never finalized and that Binance just provided wallet services as technical solution. However, Binance recorded the highest number of app downloads for the month of August in India this year and that too in a situation of unclear taxation structure.
This week, India’s Central Board of Direct Taxes (CBDT) released a redesigned standard ITR form that it expects to replace a number of ITR forms. Notably, the proposed ITR form includes questions seeking information about foreign enterprises with a user base in the United States.
According to expertise, this is an attempt to cover crypto and Web3 companies that were formed outside of India but have a user base in the country. According to a recent survey by Nasscom, India has over 450 crypto and Web3 firms, of which 60% are registered in crypto-friendly jurisdictions with a transparent regulatory environment.