According to Binance CEO, Changpeng “CZ” Zhao, high taxes on cryptocurrencies and crypto transactions in India may “kill the industry.” CZ addresses an event on the global fintech industry in Singapore in which he said that the tax rate in the country may cause the industry to be stifled.
Changpeng Zhao, CEO of the world’s largest crypto exchange, Binance, spoke out at a global fintech industry event in Singapore where he expressed the view that India’s high tax rates on cryptocurrencies and crypto transactions will likely “kill the industry” in the country. Zhao is, of course, referring to the 30% capital gains imposed on all gains made from crypto transactions which were implemented by the union finance minister, Nirmala Sitharaman, at the announcement of the Union Budget 2022 in March. The tax law obliges citizens trading in crypto to pay a capital gains tax of 30% on their crypto. Additionally, they will pay a 1% tax deducted at source on every transaction. The government has been criticized for instead of introducing comprehensive regulation, opting to impose heavy taxes on capital gains and transactions to curtail the business. Following the imposition of the high tax rates, the entire country’s trading volume collapsed within a matter of weeks.
The effects of the new tax structure have been clearly felt in India with exchanges feeling the brunt. WazirX, India’s largest crypto exchange by trading volume showed a drop in average daily transaction volume from $10.3 million in June to $2.8 million in July, representing a decline of 73% according to data from Mint. While the Indian government has decided to be rather harsh on cryptocurrencies, it has however embraced blockchain technology. The Reserve Bank of India announced that it is set to launch a central bank digital currency (CBDC) called the “digital rupee” as early as November 1. The Reserve Bank also stated that a pilot for the retail version of the CBDC would begin within a month and added that the wholesale CBDC would be used for the “settlement of secondary market transactions in government securities,” as it would significantly reduce transaction costs.
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