Multiple factors – inflation, rising interests, volatility and more have led to a fall of the crypto markets; adding to this trading volumes could have further taken a dip with the implementation of the 1 per cent TDS, which became applicable from July 1. Could it dip further? Exchanges suggest there is such a possibility.
As per data compiled by Nomics, a crypto exchange data aggregator, trading volumes across the major KYC compliant Indian crypto exchanges, WazirX, and ZebPay have crashed after July 1. Further, according to Nomics’ data, trading volume of CoinDCX crashed significantly after July 1.
Last week, when Business Today had reached out to the exchange for a comment on the same, Minal Thukral, Executive Vice-President (Growth and Strategy) at CoinDCX crypto exchange said that the dip may not necessarily be a result of the TDS but could also be attributed to the weekend.
He said, ‘The lower volume can also be attributed to weekends, which has been a trend in crypto.’
The trading volumes consistently remained low during the whole past week, as observed from the graph below.
Similar trends were observed while analysing trading volumes of WazirX exchange.
Rajagopal Menon, Vice President at WazirX told Business Today that the drop could be a result of general decline in retail interest. He also noted that the TDS might further cause a plunge in trading volumes in the times 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."
Trading volumes at ZebPay also witnessed a steep drop.
A 1 per cent TDS on cryptocurrency transfers was announced by Finance Minister Nirmala Sitharaman in the most recent Union Budget, and it came into effect from Friday, July 1.
The Finance Bill 2022 added a new clause called 194S to the Income-Tax Act 1961. It states that on every sell order of cryptocurrencies, 1 per cent of the transaction amount would be deducted as Tax Deducted at Source (TDS). The crypto exchanges are liable to deduct this amount and deposit it with Income Tax Department which the seller can offset later.
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