According to data compiled by Crebaco, a cryptocurrency research company, crypto trading volumes on India’s major exchanges have decreased since April 1, the day a new tax on crypto gains went into force. Data from CoinMarketCap and Nomics, a data provider, was used to compile the volumes of four Indian exchanges. WazirX is down 72 percent, ZebPay is down 59 percent, CoinDCX is down 52 percent, and BitBns is down 41 percent, as per the statistics. The volume of trading was calculated in US dollars.
India now applies a 30% tax on cryptocurrency profits, with no provision for balancing gains with losses from other crypto transactions. The most disputed provision, the 1% tax deducted at source (TDS) liability, will not go into effect until July 1.
The reduction in trading volumes on Indian exchanges is mostly in line with a global trend, so it’s unsure whether it’s due to the new tax law.
“April 1, 2, and 3 were holidays. Since then, volumes are continuing to fall. I don’t think this will return,” Crebaco CEO Sidharth Sogani stated.
“This has created a new benchmark. It can go further down or sideways, but it is unlikely to go back up. It is clear that the new tax has impacted the market negatively. The government must look into this, and because there is no way to stop this (crypto), the government should embrace the technology,” he shared.
Suril Desai, a top crypto lawyer, says it’s unclear whether the decline in numbers indicates that trade has shifted elsewhere. “The only trading volumes we get comes from exchanges. The off-chain trades could be happening for which there is no record,” Desai said.
In many ways, the year 2021 was a defining moment for cryptocurrencies. The year was nothing short of a fantasy run for this new asset class, with its market valuation topping $3 trillion and the introduction of Bitcoin as legal currency by a nation (El Salvador). It was a year that saw the mainstreaming of cryptocurrencies.
Earlier, India’s central bank, the Reserve Bank of India, had previously stated that a pilot CBDC project would be launched in the fiscal year April 2022 to March 2023 and so it started.