Indian crypto trading volumes slump following hefty taxes

Indian crypto traders may be giving up after 30% income tax and 1% tax per transaction on crypto trades.

Indian crypto trading volumes slump following hefty taxes

Trading volume on three giant Indian crypto exchanges is down 72.5% since July 1 when a 1% tax per transaction was enforced in the country.

The Tax Deducted at Source (TDS) starting from 1st July and appears to have negatively affected traders as exchange volumes dropped from 37.4% on BitBNS and 90.9% on CoinDCX by July 3 volume have stabilized slightly since hitting lows but still down 56.8% on an average.

Indian YouTube channel crypto India tweeted on July 4 that exchange revenues based on a 0.1% trading fee are abysmal due to the low volume levels WazirX, CoinDCX and Zebpay took in a combined $21,649 per day.

Crypto traders Mumbai's shrunk Shetty believes the TDS and the 30% income tax on cryptocurrency traders in India will be detrimental to the talent base in the South Asian nation he said: 

“Like other traders, I am trying to figure out if it’s possible to stay profitable on Indian exchanges. This will lead to another brain drain of professional traders to other countries like Dubai that are more welcoming.”

WazirX policy analyst Anuj Chaudhary explained in the June 30 episode of the WazirX show on YouTube that the 1% TDS is levied on digital assets whether it's NFT crypto assets, metaverse, or any crypto-related transaction happening on any public blockchain.

The tax will be in effect for three months as a test to determine the impact it has on the market. While trading volumes are low now policymakers want to see its result for a longer timeframe.

Chaudhary's counterpart on the show Muthuswamy Iyer, head of legal at WazirX, accurately predicted that the TDS would negatively impact the high volume, high-value traders on Indian platforms. also, he stated that he believes the TDS would also dissuade newcomers and low-frequency traders from gaining crypto exposure.

The average daily transaction volume between WazirX, Zebpay, BitBNS, and CoinDCX in June was about $9.6 million per day now that has fallen to approx $5.6 million as of July 4.

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