Crypto chaos in India? The new tax causes volumes to collapse

Jana Gana Mana! – According to data collected by Crebaco, a cryptocurrency research firm, crypto trading volumes of major Indian exchanges have dropped significantly since April 1. That day, the new tax on crypto profits came into effect in India. Volume on WazirX, the country’s largest exchange, fell 72%.

Deliquescent trading volumes in India

The volumes of four Indian exchanges were gathered by analyzing data on CoinMarketCap and Nomics, another data company. The data reveals a 72% drop on WazirX59% on ZebPay, 52% on CoinDCX and 41% on BitBns. Crebaco measured trading volumes in US dollars.

India now applies a tax of 30% on profits from crypto transactions. In addition, the country does not allow offsetting gains against losses on other transactions. The most controversial provision will not come into force until July 1. Indeed, India will then impose a tax of 1% withheld at source (TDS).

“April 1, 2 and 3 were public holidays. Since then, the volumes have continued to decline. I don’t think it will come back (…) It created a new benchmark. It may sink lower or sideways, but it is unlikely to rise again. It is clear that the new tax has had a negative impact on the market. The government needs to look at this. And since there is no way to stop this (crypto), the government should embrace the technology. »

Sidharth Sogani, CEO of research firm Crebaco

According to crypto lawyer Suril Desai, the drop in volumes could mean that trade has shifted elsewhere. He stated that “The only transaction volumes we get are from centralized exchanges. Off-chain exchanges for which there is no trace could happen”.

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Crypto exchanges want to be reassuring

The ZebPay exchange declined comment. Additionally, the other exchanges did not immediately respond to requests for comment. Sathvik Vishwanath, the co-founder and CEO of Unocoin, another Indian exchange, has meanwhile declared that the new tax law affected the market.

“People earning less than Rs 1,000,000 (about $13,000) per year are affected by a 30% fixed income tax on crypto. 1% TDS affects market makers and liquidity providers. Both are necessary for a better crypto ecosystem in India. »

Sathvik Vishwanath, co-founder and CEO of Indian exchange Unocoin

Anton Gulin, regional head of crypto exchange AAX, said the drop in volume should reverse in the near term.

“The AAX exchange has also seen an outflow of active Indian users over the past few weeks. However, I think the tax rate could be revised to attract more taxpayers, as this is the ultimate goal of any government. »

Anton Gulin, regional manager of crypto exchange AAX

Trading volumes are crashing in India following cryptocurrency regulation.

Johnny Lyu, CEO of trading platform, KuCoin, said some beginners are less inclined to invest in crypto in the short term.

“KuCoin did not register any outflow, however, according to internal data. This can be explained by the higher degree of crypto nativeness among our users (…) The new law will affect the mood and behavior of the market in the short term, but it will be difficult to block the adoption of crypto at long term. »

Johnny Lyu, CEO of the KuCoin trading platform

Although the recent regulation of cryptocurrencies in India has obviously caused trading volumes to drop, this should only be temporary. Indeed, these new laws have at least the merit of define a clear framework for crypto-assets. As a result, many investors could put their suitcases in the country. It is in any case the case of the exchange Coinbase who decided to invest a million dollars in the country.

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