Trading volumes on India’s three largest cryptocurrency exchanges have plunged an average of 72.5% since July 1, when the country imposed a 1% tax on every transaction.
The tax deduction at source (TDS), which took effect on July 1, appears to have had a negative impact on traders as trading volumes fell from 37.4% on BitBNS and 90.9% on CoinDCX as of July 3. Trading volumes have stabilized slightly since hitting lows, but are still down an average of 56.8%, according to to CoinGecko.
Indian YouTube channel Crypto India tweeted on July 4 that revenue from exchanges based on a 0.1% transaction fee is very bad due to low trading volumes. At the low point in trading volume, WazirX, CoinDCX, and Zebpay made a combined $21,649 per day.
Three months after the new crypto law came into effect, trading volumes on Indian crypto exchanges plummeted by 90-95%.
Depending on the current trading volume – the exchange can only generate a maximum of $1000 to $3000 in trading fee income.
Bitbns still seems to be doing well.
difficult times ahead. pic.twitter.com/KNDbea9BCn
— Crypto in India (@CryptooIndia) July 4, 2022
Currently, cryptocurrency traders like Mumbai-based Shounak Shetty are also hurting.Shetty Tell The Economic Times said on July 4 that he believed TDS and 30% income tax Cryptocurrency exchanges in India will Not good for talent base in South Asian countries. He says,
“Like other traders, I’m trying to figure out if it’s possible to stay profitable on Indian exchanges. This will lead to another brain drain of professional traders to other more popular countries like Dubai.”
Anuj Chaudhary, policy analyst at WazirX, explained on June 30 episode The WazirX Show on YouTube stated that 1% of TDS is levied on “digital assets, whether it’s NFTs, crypto assets, Metaverse, or any type of transaction that takes place on top of a public blockchain.”
The tax will be effective for three months as a test to determine its impact on the market. While trading volumes are low right now, policymakers want to see its results over a longer period of time.
Only gift cards, mileage points, bonus points and non-monetary loyalty rewards used to acquire merchandise or receive discounts, and subscriptions to websites, platforms or applications are exempt from tax.
Chaudhary’s opponent on the show, Muthuswamy Iyer, legal director at WazirX, accurately predicted that TDS would negatively impact high-volume, high-value traders on Indian platforms. He added that he believes TDS will also prevent newcomers and low-frequency traders from gaining exposure to cryptocurrencies.
WazirX, Zebpay, BitBNS and CoinDCX had average daily trading volumes of around $9.6 million per day in June, but had dropped to around $5.6 million as of July 4.