Indian crypto exchanges facing tough times as volumes nosedive

Synopsis

As announced in the union budget 2022, the Indian government is levying 30 per cent taxations on the gains arising from the trade of crypto assets. Many of the market players saw this move as an anti crypto stance.

Indian investors are not offsetting the gains against the losses from other assets and the government will treat all the crypto assets separately. New Delhi: Even in the boiling summers, Indian crypto exchanges are going through rough and prolonged winters, thanks to a major slump in their trading volumes, since the new regulations around virtual digital assets (VDAs) have been applied.

According to a tweet from Aditya Singh, Co-Founder of Crypto India, the major crypto trading platforms have registered a two-third in the trading volumes on their platforms.

As announced in the union budget 2022, the Indian government is levying 30 per cent taxations on the gains arising from the trade of crypto assets. Many of the market players saw this move as an anti crypto stance.
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Arijit Mukherjee, Founder and CEO, Yunometa said that not only high taxes, but the latest fiasco of withdrawal of UPI payments by leading banks is also hurting the exchanges badly.

“The overall geo-political crisis due to the Russia-Ukraine war is also worrisome,” he added. “As these disruptions stabilise in India and the rest of the world and there’s more clarity about crypto assets, we can expect the steep fall to reverse.”

Indian investors are not offsetting the gains against the losses from other assets and the government will treat all the crypto assets separately. Indians have taken to social media to express their displeasure.

Pratik Gauri, Founder and CEO, 5ire said, “The volume drop of crypto trading on Indian exchanges is massive. We are talking about a decline of 72 per cent on WazirX, 59 per cent on ZebPay, 52 per cent on CoinDCX and 41 per cent on BitBns.”

The timing of the dramatic lowering of volumes is also curious since it followed the new tax regime that RBI and the finance ministry’s new elevated tax went into effect, he added.

The trading volumes for WazirX have dropped below $100 million from about $210 million in a day, ever since the new rules were kicked into force earlier this month.

Nischal Shetty, Founder, WazirX said, “There has been a dip of 10 per cent in the global exchanges due to market conditions in the last one monre, but our corrections are 30-40 per cent.”

Like other experts, he too pointed at the confusion of taxes and also the 1 per cent TDS being implemented soon, as the key reason for this fall.

“The markets are still coming to terms with the new taxation while we wait for clarity,” he added. “We hope that TDS is reduced from 1 per cent to 0.01 per cent as it will aid the government in tracking transactions and provide liquidity.”

For Coin DCX, the daily traded volumes dwindled down to a little more than $10 million in the beginning of April, which was around $36.23 billion by the end of March.

When contacted by Etmarkets.com, the spokesperson from the exchange denied to comment or share any clarification over the issue.

Other exchanges including Bitbns and Zebpay too took a massive blow in terms of trading volume, but did not respond to ET’s query till the time the story was released.

According to market experts, cryptos usually move in cycles where there are one or two years of rapid growth like the last two years. This is followed by some correction and again succeeded by a growth period.

“Such phases are evident if you track the historical movement of crypto,” responded Shetty from WazirX, who is hopeful of maturity in the space over the next few years.

Amid the sharp fall in the numbers, WazirX is hinting towards the relocation of its operations overseas. This movement of its founders to Dubai headlined the media reports, lately.

However, it is not only WazirX which is reported to move out of India. The stringent tax rules have led to a heavy exodus the crypto talent from the country, with a few hoping things to improve soon.

Gauri from 5ire does not think that the vitality and the volume in crypto will return anytime soon. “But, that does not mean it also translates into a lack of investments in crypto and Blockchain technologies,” he added.
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Updated: 04/28/2022 — 10:00