Binance has announced that it will not support the $LUNC tax burn to spot or margin trades made on its exchange. Luna Classic governance proposals 3568 and 4159 were passed to add a 1.2% tax to all on-chain transactions at a block height of 9,475,200.
However, exchange trades are managed through an internal order book and are not settled on-chain. Only deposits and withdrawals are registered on-chain to ensure fast trade settlement. DEXs allow users to trade on-chain and thus will apply the 1.2% tax burn but other exchanges are likely to follow Binance’s lead.
Binance will apply the tax to all deposits and withdrawals, according to a press release from the company issued Thursday.
“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.”
KuCoin also announced Wednesday that it would “support” the tax burn. However, it fell short of declaring if it would apply the tax to trades but confirmed it would apply to withdrawals and deposits.
In reality, all exchanges will have to support the tax burn for deposits and withdrawals as they are registered on-chain between the exchange and the customer’s wallet. Any announcement that an exchange is supporting the tax is merely public relations positioning. Yet, Binance did provide some new information in that it will not honor the burn on trades.
FatmanTerra replied to KuCoin’s announcement confirming that “you can’t opt out of it” and that “no exchange is ever going to” support the tax burn on trades.
How are you “supporting” anything here given that the burn tax will be forced on-chain? You can’t opt out of it. It applies to all deposit and withdrawal transactions. Nothingburger PR post. Taxing actual *trades* would be newsworthy, but no big exchange is ever going to do that.
— FatMan (@FatManTerra) September 7, 2022
KuCoin took full advantage of the added attention in a tweet later on Thursday, engaging the Luna Classic community to speculate on the price.
👀 What’s your price prediction for #LUNC at the end of 2022?
— KUCOIN (@kucoincom) September 8, 2022
However, one exchange, MEXC Global, supports the burn on all spot trades for a limited time. The exchange’s fees for $LUNC pairs were updated to 1.2% on September 3 and will continue until September 17. All trading fees are burnt daily and shown on the MEXC website.
To support the burn tax proposal from the #TerraClassic $LUNC community, #MEXC will launch a time-limited burning event for $LUNC/USDT spot trading fees 🔥
⏰Event Period: 10:00 Sep 3 – 10:00 Sep 17 (UTC)
Details: https://t.co/ocus94MDgu#TerraClassic #Terra #TERRALUNA pic.twitter.com/M8fUNmd6S1
— MEXC Global (@MEXC_Global) September 3, 2022
To date, on September 9, MEXC has burnt roughly 154 million $LUNC valued at around $79,500. The exchange stated it “will decide whether to extend the event based on feedback from MEXC users.” Leaving the door open to the burn continuing after September 17.
Source: https://cryptoslate.com/binance-will-not-apply-terra-classic-tax-burn-to-spot-trade-on-exchange/