- Local crypto exchanges have seen a sharp decrease in volumes over the first three days of April.
- Aditya Singh, the co-founder of Crypto India, has also said how trading has plummeted in a tweet.
- Coinbase crypto exchange announced that On Thursday, April 7 would be hosting a crypto community event in Bangalore to discuss the future of crypto and web3 in India amid the crypto crash.
Cryptocurrency volumes on Indian exchanges have decreased since the new tax legislation took effect on April 1. Many Indian traders are even scared of the outcome of another planned 1% tax deducted at source law from July, which analysts believe will affect liquidity in the market.
Crypto exchanges and traders feel the pinch
Since the new tax legislation went into effect in April, cryptocurrency exchanges in India have seen a significant drop in user activity. Reports note that cryptocurrency volumes on various Indian exchanges dropped between 15% to 55% which the 30% tax rule went into effect.
The number of visitors to these marketplaces has also decreased. Sidharth Sogani, CEO of CREBACO Global, said they “saw a drop in transactions of up to 55% versus those in March-end, as well as a decline of around 40% in domain traffic on Indian exchanges.”
WazirX, a major cryptocurrency exchange in India, recorded a significant decline in its trading volume, which presently stands at under $100 million from $208 million at the start of the month. Aditya Singh, the co-founder of Crypto India, also shared a graph of how trading has plummeted on several exchanges.
Investors are even more perplexed about the tax at source rule, which is expected to go into effect in July. According to experts, the new regulations may have a negative impact on market liquidity. This is due to the fact that active traders would limit their activity in order to avoid losses. This is the law that has the cryptocurrency community concerned.
Crypto ecosystem in India
Over the past years, Indian traders have been faced with uncertainties regarding the state of cryptocurrency in the country. The Indian authorities have been trying to grip the cryptocurrency market for some time now. In December 2021, an Indian political group, the Swadeshi Jagran Manch (SJM), called on the government to ban cryptocurrency in the country outrightly.
Regardless of the headwinds in the market, Coinbase, one of the world’s largest crypto exchanges, continues to invest in some of the home-grown crypto and Web3 related projects. So far, the exchange has reportedly invested about $150 million in these companies through its venture’s arm.
It would appear that the new tax legislation is having a negative effect on the Indian market. However, the long-term outlook for cryptocurrencies in the country remains positive.