The trading volume on TOP Indian crypto exchanges including CoinDCX, ZebPay, WazirX saw a significant drop in trading volumes after the 1% tax deduction at source (TDS) rule went live starting July 1.
According to a new report on Bloomberg, the trading volume on these three cryptocurrency exchanges dropped between 60%-87% while the volume for another exchange Giottus dropped by 70%, as per the CEO of the firm.
The Indian government passed the Union Budget for the year 2022-23 confirming a provision for a 30% tax on cryptocurrencies starting April 1. Despite backlash from the crypto community and service providers, the government passed the Budget, causing a huge drop in the trading volume of exchanges like CoinDCX.
“We continue to see new users come to the platform, but the growth is not as high as it used to be, say, two months ago,” said Sumit Gupta, co-founder, and chief executive of CoinDCX, in an April interview.
The current decline in trading volumes is a result of a 30% tax rate, 1% TDS rule, a bearish market, and the liquidity crisis that has caused many DeFi and crypto firms to halt withdrawals.
Since crypto exchanges operate 7 days a week and 24 hours a day, Bloomberg noted that the Binance-backed firm WazirX did $3.8 million worth of trading on July 2. However, in July last year, transactions worth this amount would’ve happened in two hours.
WazirX vice-president Rajagopal Menon believes that traders are doing peer-to-peer transfers and are migrating to decentralized exchanges owing to the harsh laws prevailing in the nation.