In the wake of major Indian exchanges witnessing drastic drops in trading volume since the 30% tax on obtained revenues came into effect on April 1, the industry now encounters additional downward pressure following the introduction of another new tax that kicked in last Friday. Trading volume on large platforms has been down roughly 95% as a result.
Trading Volume Plunging Heavily
According to data collected by nomics.com, daily trading volume at the Binance-backed local crypto exchange, WazirX, dropped over 63% on July 1 to $5.36 million from $14.53 million on the day before. To another giant, CoinDCX, the volumes shrunk by approximately 20% during the same period.
The sharp decline in trading activities results from the latest 1% tax – imposed by the Reserve Bank of India (RBI) – on the sale and transfer of crypto assets exceeding $127. It came at a time when the broader interest in such assets plummeted, as the primary cryptocurrency slumped to and below the $20,000 key level.
As a result, exchanges are under immense pressure amid a drastic decline in trading volume. To Indian platforms, the situation has even worsened with the notorious 30% flat tax on all crypto income kicking in on April 1.
Their trading volume plunged by 90-95% three months after the all-sweeping tax law was put into practice, according to the well-known analysis platform Crypto India.
Noticeably, platforms such as WazirX, CoinDCX, and Zebpay are down roughly 95% in trading volume during the same period. Based on the current volume, the platform predicted that exchanges could only generate trading fee revenue of $1,000 to $3,000 at maximum.
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
Vauld Seeking Restructure
The latest example of Indian exchanges falling in struggle came from the Coinbase-backed Vauld. The four-year-old firm announced the suspensions of withdrawals, trading, and deposits across its platform on July 4, citing the financial difficulties of its key partners as affecting its businesses.
According to the company, the move aims to explore “the suitability of potential restructuring options” with its financial and legal advisors.
Before the abrupt announcement, the exchange had already laid off 30% of its workforce in a bid to survive through the crypto winter.