Recently Financial FIU sent a notice to Binance and a few other exchanges for not sharing the transaction data as per the regulations. Binance and other non-compliant exchanges would likely be banned in India. This article provides more details on this subject. The Indian government is trying to take these initiatives to prevent Money Laundering through these means. A few days back I wrote an article on this subject. Recently I read a few information on this and and wanted to follow up.
This is a very important subject for any individuals who are trying to do some trading in India or use a foreign exchange to do their trading. Recently there was a notice from Bittrex saying that they are going to shut down their operations globally and all the users had to move their funds to other wallets. We all expected that Binance would also be on Radar and might have some difficulties operating. On one side SEC is putting pressure and on the other side, governments like India are trying to put some pressure on Binance to have more transparency.
I think that if the government had reached out to the right authorities, I guess Binance may not have had any problem disclosing the data to the government. The reason I feel this way is because they are anyways already doing a KYC and trying to collect customer information. The trade history is saved and there shouldn't be a problem in sharing the data with the Indian government. We might as well soon get an Indian version of Binance like how it is being done right now for the US.
People don't want to take risks but from what the media is saying many people have started to move their funds from Binance to either private wallets or to Indian exchanges that follow all the proper guidelines. Some people who have enough money to trade in the crypto market wouldn't care too much about the money they have to pay as TDS or tax. They would like to make more money and follow all the rules and this way they end up in an Indian exchange that follows all the guidelines properly. When people make money from trading, they just make sure that 30 percent of that money is not theirs and pay it as a tax.
After the notice from FIU, it is believed that the trading volume on Indian exchanges has increased right now. People are not sure what would happen to the foreign exchanges and they would like to keep their investments safe and maybe they started moving already. Indeed, we don't know what will happen to these foreign exchanges. Similar to the US where Binance is not accessible for the users, we might as well have a problem in the future where Binance may not be accessible in India.
Today in the share markets we have a facility to link our PAN numbers in India. This way the activities we do with the Demat account are all being tracked by the government and the taxes are also deducted automatically from some of the returns. Especially dividends are the best place where we can see this. When we receive a dividend, we would receive an amount that is after deduction of TDS, and towards the end of the year when we try to file Income tax returns, that value would be visible.
It would be nice if the government could have a governing body similar to SEBI that would take care of the crypto transactions and make sure the tax is automatically paid or we have a clear picture of the taxes. If it is done this way, people would be very happy to start using Indian exchanges for their activities and would be comfortable building on top of Blockchain or cryptocurrencies.
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