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"Too early to observe trend"; Indian exchanges remain optimistic despite a dip in trading volumes 

"Too early to observe trend"; Indian exchanges remain optimistic despite a dip in trading volumes 

The new tax law has taken its toll on KYC-compliant crypto exchanges in India as the trading volumes have steeply declined, as previously reported by Business Today. 

Trading volumes take a deep dive across KYC compliant centralised crypto exchanges in India. Trading volumes take a deep dive across KYC compliant centralised crypto exchanges in India.

Trading volumes across KYC-compliant crypto exchanges in India have taken a sharp hit since 1 per cent TDS on crypto transfers became applicable on July 1, but major crypto exchanges remain optimistic. 

Minal Thukral, Executive Vice-President (Growth and Strategy) at CoinDCX crypto exchange told Business Today that the dip might not necessarily be a result of the TDS but could also be attributed to the weekend. 

He said, “It is too early to comment on a trend - we are just a few days into the month. The lower volume can also be attributed to weekends, which has been a trend in crypto.” 

Moreover, Thukral also highlighted that the exchange is trying to roll out new products which reduce the tax burden of investors to retain a retail interest in crypto investing. 

He said, “CoinDCX has also been focused on launching TDS-friendly products. Recently, we launched CoinDCX Earn which has been seeing great adoption.”  

Similar views were echoed by Rajagopal Menon, Vice President at WazirX crypto exchange. He told Business Today, "At present, it is still premature to predict the ramifications of TDS. We will be in a better position to understand this by the second week of July. The VP pointed out that the dip in trading volumes could be the result of the general drop in retail interest due to bearish market sentiments. He also claimed that the TDS might cause another dip in trading volumes in the time to come. 

He said, "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." 

Menon stressed that the exchange is now focusing on complying with the new tax laws. He said, "Our focus is more on adhering to the new taxes rules and meeting the required standards that are being set." 

In the recent Union Budget, Finance Minister Nirmala Sitharaman announced 1 per cent TDS on cryptocurrency transfers, which became applicable from Friday, July 1. 

According to the new tax law, 1 per cent of each cryptocurrency transfer will be taxed and deducted at the source. 

As previously reported by Business Today, the new tax regulation has had a negative impact on KYC-compliant crypto exchanges in India as trading volumes have sharply decreased. 

According to data sourced by Crebaco, a crypto research firm, trading volumes on WazirX exchange, the largest Indian crypto exchange in terms of trading volumes witnessed an 82 per cent drop after July 1. 

The dip in trading volumes was approximately 70 per cent for CoinDCX crypto exchange and around 76 per cent for ZebPay exchange.  

Data compiled by Nomics, a crypto data aggregator, also shed light on the drastic dip in trading volumes on Indian exchanges. 

Also Read: All you need to know about TDS on cryptos in 5 points     - BusinessToday

Also Read: What is the OneCoin scam promoted by Cryptoqueen Ruja Ignatova? - BusinessToday