Indian crypto trading volumes fall further in July-August

While the global crypto market is showing initial signs of recovery, trading volumes of Indian crypto exchanges fell further in August as the gloomy crypto winter continues in India. While the average spot trading volumes of the top Indian exchanges shrank in July after the Government of India imposed a 1 percent TDS on the sale of cryptocurrency assets. Volumes continued to decline in August on the back of the WazirIX controversy, which has put 10 additional exchanges under the lens of the Enforcement Directorate, which is investigating 10 exchanges to detect money laundering by foreign firms via crypto. According to the data shared by Crebaco, cryptocurrency research company WazirIX, ZebPay and Bitbns show a decrease in trading volume of 18 percent, 20 percent and 42 percent respectively between July and August 2022.

Since the implementation of 1 percent TDS by the government in late June, the top Indian stock exchanges showed a decline in trading volume. Between June and July, CoinDCX, ZebPay and Bitbns saw a decline of 71 percent, 49.2 percent and 22.8 percent respectively.

Trading volumes in the Indian crypto market have seen a decline in 2022 as a result of the crypto winter triggered by the collapse of the TerraUSD stablecoin as well as the Indian government’s cryptocurrency trading tax policy.

Against the global backdrop, gains from the crypto market also fell in August. Last week, cryptocurrencies saw a sharp sell-off as global markets retreated after US central bank officials reiterated their decision to keep raising interest rates until inflation is contained. Consequently, Bitcoin erased most of its gains currently at a two-month low. However, experts note that the bear market globally is in a recovery cycle and trading volumes in global crypto exchanges continue to slowly rise. “The recent decline in Bitcoin has not had any impact on the trading volumes of global exchanges or created liquidity problems,” said Sidharth Sogani, founder and CEO of Crebaco Global.

Bitbns has reported zero trading volume for the past week as the police blocked INR withdrawals in relation to a cybercrime case.

Sogani notes that volumes for Indian exchanges will continue to decline until the Indian government removes tax burdens on cryptocurrency trading and regulates the exchanges operating in India. “Indian stock exchanges will continue to face liquidity crunch,” Sogani noted.

Meanwhile, the Reserve Bank of India has shown little interest in regulating digital assets, a sentiment likely reinforced from the recent troubles with ED.

However deterred by the uncertainty in Indian bourses, most traders are likely to stay away from the market and the recovery of Indian bourses will not follow global trends, according to experts.

Sogani also notes that Indian crypto exchanges also need to be more transparent to inspire investor confidence.

Published on

22 August 2022