Global cryptocurrency holders suffered greatly during the crypto winter. In fact, the global cryptocurrency market capitalization even fell below $1 trillion. This is a far cry from the peak in November 2021 when he amassed $3 trillion.
While many universal challenges have held back market growth this year, some challenges are more local. Consider India, for example.
Government clamping down on local crypto spirit
Alarm bells sounded when the Ministry of Finance first established taxes for cryptocurrencies in India. Still fresh out of the November 2021 bull market, the government decided to heavily tax digital assets.
Indian Crypto He recently shared a thread on Twitter talking about the burden and pressure on Indian crypto exchanges. Unsurprisingly, the numbers have been bad, with the same repeated concerns associated with crypto regulations in India.
1/ Since the new crypto tax rules were applied, trading volume on Indian exchanges keeps falling 🔻
Wazirx – $195M➡️$4.5M – 98% 🔻
Coindcx – $32M➡️$2.1M – 93% 🔻
Zebpay – $19M➡️$1.1M – 94% 🔻
Bitbns – $24M➡️$19.8M – 17% 🔻 (Somehow not affected as much) pic.twitter.com/0MnT7EFGyg
— Crypto India 🔑 (@CryptooIndia) July 3, 2022
As mentioned above, crypto exchange volumes in India have been severely affected by taxes since April 1.
WazirX saw a 98% drop, ZebPay took a 94% hit, while CoinDCX volumes dropped by 93%. Interestingly, Bitbns volumes are down just 17%. Still, these are huge numbers 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 applies to payments over Rs 10,000 in a year, as per Section 194S of the IT Act (as per the Finance Act, 2022).
The thread further states that cryptocurrencies can be revived in India through the following measures:
Since the 1% TDS is not applicable in futures trading, it may be a new place for investors, if it is introduced. The government can also introduce SIP options for altcoins. SIP options are currently only available for major cryptocurrencies such as Bitcoin and Ethereum. Users can be attracted by introducing loans and loans.
Long-term “hodlers” can lend their shares to the platforms and earn interest on them. The government can also make use of the licenses to allow stock and commodity trading. This can attract more traditional finance users to the platform, driving user growth, volumes and revenue.
What do the exchanges have to say?
Needless to say, Indian crypto exchanges are worried.
According to Rajagopal Menon, Vice President of WazirX,
“There has been a dip in trading across the industry as investors move to holding and there may be another dip as traders see their capital locked up while trading on KYC compliant Indian exchanges.”
However, Edul Patel, CEO of Mudrex, remains bullish, despite bearish headwinds across the market.
“We are actively hiring and it is not about cuts. Bear markets remove the noise and allow room for creativity and innovation. For us, it is a ‘construction’ market and not a bear market.”