Global crypto-holders suffered a lot during the crypto-winter. In fact, the global market cap of cryptocurrencies even dropped below $1 trillion. This is a far cry from the peak in November 2021 when it amassed $3 trillion.
While a lot of universal challenges have pulled back the market’s growth this year, some challenges are more local. Consider India, for instance.
Govt. clamping down on local crypto spirit
Alarm bells were ringing when the Ministry of Finance first laid out taxations for cryptocurrencies in India. Still fresh from the bull market of November 2021, the government decided to levy heavy taxes on digital assets.
Crypto India recently shared a thread on Twitter talking about the burden and pressure on Indian crypto-exchanges. As expected, the numbers have been bad, with the same reiterating concerns associated with crypto-regulations in India.
1/ Ever since new crypto tax rules📜 became applicable, trade volume on Indian🇮🇳 exchanges continues to tumble 🔻
Wazirx – $195M➡️$4.5M – 98% 🔻
Coindcx – $32M➡️$2.1M – 93% 🔻
Zebpay – $19M➡️$1.1M – 94% 🔻
Bitbns – $24M➡️$19.8M – 17% 🔻 (Somehow not affected that much) pic.twitter.com/0MnT7EFGyg
— Crypto India 🔑 (@CryptooIndia) July 3, 2022
According to the aforementioned, crypto-exchange volumes in India have been severely affected by taxations since 1 April.
WazirX has seen a dip of 98%, ZebPay took a hit of 94%, while CoinDCX’s volumes are down by 93%. Curiously, Bitbns’ volumes has fallen by just 17%. Even so, these are huge figures considering 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 is applicable on payments beyond Rs 10,000 in a year, according to the Section 194S in the I-T Act (per Finance Act, 2022).
The thread further claims that crypto can be revived in India through the following measures –
Since 1% TDS is not applicable on Futures trading, it can be a new venue for investors, if introduced. The government can also introduce SIP options for altcoins. Currently, SIP options are only available for major cryptos such as Bitcoin and Ethereum. Users can be attracted by introducing lending and borrowing.
Long term “hodlers” can lend their holdings to platforms and earn interests on the same. The government can also avail licences to allow stock and commodity trading. This can attract more traditional finance users to the platform, driving user growth, volumes, & revenues.
What do exchanges have to say?
Needless to say, India’s crypto-exchanges are worried.
According to Rajagopal Menon, Vice President of WazirX,
“There has been a fall in trading across the industry as investors shift to hold and there may be another dip as traders see their capital getting locked while trading on KYC-compliant Indian exchanges.”
Edul Patel, CEO of Mudrex, remains optimistic, however, 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 space for creativity and innovation. For us, it is a ‘build’ market and not a bear market.”