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Stakeholders and exchanges have warned of the potential adverse effect India’s 30 percent crypto tax could bring even before its approval. It now appears that they might be right after all as fresh data on crypto exchanges’ trading volume show a significant decline just days after the new tax took effect.
Research data from the Indian blockchain analytic firm Crebaco revealed that trading volume on India’s top platforms plunged by as much as 70 percent in the last 10 days after the crypto tax took into effect, according to Cointelegraph. The 30 percent tax on crypto was implemented starting April 1, 2022.
Crypto exchange WazirX experienced the worst decline with a reported drop of 72 percent in trading volume. The platform’s volume dropped to just $13.2 on Sunday, April 10, from $47.8 million on April 1.
CoinDCX’s trading volume dropped from $12.16 million to $5.76 million or a 52 percent decline. Zebpay also suffered a 59 percent decline from $4.46 million to $1.81 million.
Meanwhile, many payment processor partners have distanced themselves from crypto exchanges. For instance, Mobikwik, one of the preferred methods of payment by Indian crypto investors when buying digital currencies at exchanges, reportedly withdrew the service from exchanges on April 1 due to unclear regulations, according to Bitcoin.com.
“Mobikwik did not give any specific reason for withdrawing its services,” an unnamed crypto exchange executive said. “We were just told that they won’t be partnering with exchanges anymore.”
Senior crypto lawyer Suril Desai noted that it is yet unclear of the drop in volumes in exchanges might mean trading has moved somewhere else. “The only trading volumes we get come from exchanges. The off-chain trades could be happening for which there is no record,” Desai said, according to Coindesk.
Aside from the 30 percent crypto tax, another potentially damaging tax will go into effect by the second half of the year. Starting on July 1, crypto transactions will be subject to a 1 percent tax deducted at source (TDS), which many believe could be disadvantageous to the crypto industry.
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