The billionaire CEO of Binance Holdings Ltd, Changpeng Zhao, has tightened his grip on the Indian cryptocurrency exchange market in a major tax overhaul.

According to market intelligence firm Sensor Tower, Binance’s app downloads in India jumped to 429,000 in August, the highest figure this year and nearly triple the second-placed CoinDCX. Only Binance among the top exchanges had higher downloads in India compared to July.

The world’s largest cryptocurrency exchange operator has emerged from a market where rivals have been hobbled by high taxes and difficulty getting money in and out of trading venues. Daily trading volumes on major platforms in India have fallen by more than 90% since introducing a 1% tax on crypto transactions in July.

While Zhao beats competitors with low fees, diverse offerings and a popular peer-to-peer marketplace make it easier to move between tokens and cash. Another factor is the difference in how foreign exchange and exchanges of Indian origin handle transaction taxes levied on domestic residents.

Some users of the app, who asked to remain anonymous, said that Indian-origin platforms have started deducting taxes. Still, many foreign counterparts such as Binance and FTX have not, prompting investors to turn to the latter, given that the matter is related to tax law. Traders may see loopholes in lax enforcement and a grey area of whether the law applies to more complex transactions.

Rohan Misra, CEO of SEBA India, a subsidiary of Swiss-based SEBA Bank AG, said: “Recent tax regulations have not made it clear whether the 1% tax deducted at source applies to crypto derivatives transactions involving futures, just as it applies to crypto spot transactions.”

Binance’s gains came from a rare public spat with Indian partner WazirX, which led Zhao to encourage WazirX clients to defect to Binance. Monthly downloads of WazirX dropped from about 596,000 in January to 92,000 in August.

The 1% levy (commonly referred to as TDS) is on top of the new 30% tax on crypto asset transfer gains, which is higher than in many other jurisdictions, such as the US and UK.

The rules introduced this year also prohibit crypto trading losses from being offset by revenue. Additionally, the limited support of the banking system makes it difficult to fund accounts or convert from tokens to fiat currency.
The wide acceptance of the Binance app is in stark contrast to the decline of most other players. For example, Sensor Tower data shows that CoinDCX downloads fell from 2.2 million in January to 163,000 in August.

Billionaire Sam Bankman-Fried’s FTX had nearly 96,000 downloads in India in July and 52,000 in August from about 40,000 in January.

San Francisco-based Coinbase Global Inc said it complies with crypto transaction tax rules. Its downloads in India fell from nearly 31,000 in June to 16,000 in August.