Binance will not apply Terra Classic tax burn | The Financial Express

Binance will not apply Terra Classic tax burn

To ensure quick trade settlement, only deposits and withdrawals are registered on the blockchain.

Binance will not apply Terra Classic tax burn
Any declaration that an exchange supports the tax is nothing more than public relations spin.

The $LUNC tax burn to spot or margin trades executed on Binance’s exchange will not be supported, according to the company’s announcement, as reported by Cryptoslate.

 At a block height of 9,475,200, the Luna Classic governance proposals 3568 and 4159 were approved, imposing a 1.2% tax on all on-chain transactions.

As per Cryptoslate, exchange trades, however, are not settled on-chain and are instead managed through an internal order book. To ensure quick trade settlement, only deposits and withdrawals are registered on the blockchain. DEXs will apply the 1.2% tax burn because they let customers trade on-chain, but other exchanges are probably going to follow Binance’s example.

As per a press release by Binance, “Deposits: Transactions will be taxed by the Terra Classic network before it reaches Binance. The balance will be credited to your Binance account after the 1.2% tax deduction by the network. Withdrawals: Users will receive the withdrawal amount minus withdrawal fees charged by Binance and the 1.2% tax deduction by the network.” 

On Wednesday, KuCoin also declared that it will “support” the tax burn. However, it did not specifically state whether the tax would be applied on trades, only that it would be applied to withdrawals and deposits, Cryptoslate noted.

Since deposits and withdrawals are reported on-chain between the exchange and the customer’s wallet, every exchange will really need to support the tax burn for these operations. Any declaration that an exchange supports the tax is nothing more than public relations spin. However, Binance did reveal some novel information, namely that it will not respect trade burn.

(With insights from Cryptoslate)

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