Changpeng Zhao (CZ), founder of Binance, recently warned that protectionist policies in India are harming economic growth. In response to the Indian rupee hitting a record low (around ₹88.4 per USD), he said:
“Protectionism is always at the expense of the people, i.e. the economy.”
He further emphasized that the best way to boost the economy is by adopting innovation, rather than relying on restrictive trade or regulatory policies.
Context: What CZ Has Criticized Before
- CZ has previously voiced frustration with India’s crypto tax regime, which includes a 30% tax on crypto profits and a 1% deduction at source (TDS) on transactions. He has argued that such high taxes and overheads discourage transactions and make business “not very viable.”
- He has said India is “not a very crypto-friendly environment” for global exchanges due to regulatory burdens. TechCrunch
Why His Comments Matter
| Factor | Implication |
|---|---|
| Economic Loss from Protectionism | Protectionist policies—high taxes, trade barriers, strict regulations—can reduce foreign investment, slow innovation, and limit market competition. CZ’s remarks suggest that these factors are contributing to India’s weakening rupee and slowing business growth. |
| Signal to Investors & Startups | Public criticism from CZ may influence investor sentiment. If investors perceive regulatory risk or hostile regulatory environments, they may shift capital elsewhere. |
| Crypto Industry Impact | For the crypto sector in India, the combination of heavy taxation, regulatory uncertainty, and protectionist postures may reduce activity, volumes, and innovation. CZ’s earlier remarks indicate that high transaction taxes significantly reduce trading volumes. |
Some Pushback & Caveats
- Regulatory Intent: India’s protectionist policies—including high import tariffs, strict tax regimes for digital assets, and regulatory oversight—are often justified by the government on grounds of consumer protection, financial stability, preventing money laundering, and preserving fiscal revenues.
- Balancing Innovation and Regulation: While openness and innovation are important, governments also often weigh risks of misuse, fraud, tax evasion, etc. Finding the right balance is complex.
- Economic Complexity: The rupee’s decline and economic pressures aren’t driven solely by protectionism. Global macroeconomic forces, trade imbalances, inflation, capital flows, and external debt also play large roles.
What India Could Consider
- Reducing or Rationalizing Trade Barriers: Lowering unnecessary tariffs or simplifying trade policies could encourage imports of capital goods, technology, and inputs needed for growth.
- Tax Reforms for Digital Assets: Streamlining crypto taxation (lowering TDS, reducing friction) may revive investor and user activity.
- Regulatory Clarity: Clear, predictable rules (e.g. for crypto, fintech) tend to attract investment. Uncertainty often deters it.
- Encouraging Innovation Ecosystems: Incentives for startups, R&D, and public-private partnerships may help offset the drag from protectionism.
