India: The volume of cryptocurrencies is falling, but for how long
Global crypto holders suffered a lot during the crypto winter. In fact, the global market value of cryptocurrencies even fell below $ 1 trillion. This is far from the peak in November 2021 when it raised $ 3 trillion.
While many universal challenges have dampened market growth this year, some challenges are more local. Think of India, for example.
Govt. squeeze down on local crypto spirit
The alarm bells rang when the Ministry of Finance first set taxes on cryptocurrencies in India. Still fresh from the beef market in November 2021, the government decided to impose heavy taxes on digital assets.
Crypto India recently shared a thread on Twitter that talked about the burden and pressure on Indian crypto exchanges. As expected, the numbers have been poor, with the same recurring concerns related to crypto-regulations in India.
1 / Ever since new crypto tax rules📜 came into force, the trading volume on Indian🇮🇳 exchanges continues to fall 🔻
Wazirx – $ 195 million➡️4.5 million dollars – 98% 🔻
Coincx – $ 32M➡️ $ 2.1M – 93% 🔻
Zebpay – $ 19 million➡️1.1 million dollars – 94% 🔻
Bitbns – $ 24M➡️ $ 19.8M – 17% 🔻 (Somehow not so much affected) pic.twitter.com/0MnT7EFGyg– Crypto India @ (@CryptooIndia) July 3, 2022
According to the above, crypto exchange volumes in India have been strongly affected by taxes since 1 April.
WazirX has seen a decline of 98%, ZebPay got a hit of 94%, while CoinDCX’s volumes are down by 93%. Oddly enough, Bitbns’ volumes have fallen by only 17%. Nevertheless, these are huge numbers considering that the industry is still in its infancy in India.
The Reserve Bank of India (RBI) has added an additional 1% TDS on digital assets and cryptocurrencies. The tax applies to payments in excess of Rs 10,000 during a year, in accordance with section 194S of the IT Act (in accordance with the Finance Act, 2022).
The thread further claims that crypto can be revived in India through the following measures –
Since 1% TDS is not applicable to futures trading, it may be a new place for investors, if introduced. The government may also introduce SIP options for altcoins. Currently, SIP options are only available for large cryptocurrencies such as Bitcoin and Ethereum. Users can be attracted by introducing loans and loans.
Long-term “holders” can lend their holdings to platforms and earn interest on the same. The government can also use licenses to allow stock and commodity trading. This can attract more traditional financial users to the platform, and drive user growth, volumes and revenue.
What do the stock exchanges have to say?
Needless to say, India’s crypto exchanges are concerned.
According to Rajagopal Menon, Vice President of WazirX,
“There has been a decline in cross-industry trading as investors shift to hold, and there may be a further decline as traders see their capital locked up while trading on KYC-compliant Indian stock exchanges.”
However, Edul Patel, CEO of Mudrex, remains optimistic, despite bearish headwinds across the market.
“We are actively hiring and there is no question of trimming. Bear markets weed out the noise and allow for creativity and innovation. For us, it is a “construction market” and not a bear market. “
