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TDS rule brings down volumes on crypto sites

Cryptocurrency exchanges CoinDCX, WazirX and Zebpay spot trading volumes are July 3rd compared to June 30th, despite the enforcement of rules requiring withholding on all transactions on July 1st. Has decreased by at least 70%.

According to data from cryptocurrency research and consulting firm Crebaco, WazirX’s volume fell the most at 82%. The decrease was almost 70% for CoinDCX and 76% for ZebPay.

Cryptocurrency exchanges say it’s premature to know the actual impact of tax withholding (TDS) as weekend trading volumes are usually low, but some experts continue to put pressure on trading. He said he could be exposed to.

“Currently, it’s too early to predict the impact of TDS. By the second week of July, we’ll have a better understanding of this,” said Rajagopal Menon, vice president of WazirX. “As investors shift to holdings, trading across the industry declines, and there may be another dip when we see capital locked while traders are trading on KYC-compliant Indian exchanges. “No,” he added.

The newly introduced 1% TDS for the sale and transfer of virtual digital assets will move day traders from Indian exchanges and re-strategy playbooks, senior crypto industry executives said. Told to.

Last year, the volume of cryptocurrency exchanges surged due to continued investor interest. Industry estimates indicate that the top 5-6 Indian crypto platforms recorded $ 70-100 billion in trading volume in 2021 and WazirX alone processed about $ 43 billion, ET reported on April 1. Did.

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Impact on traders

Industry insiders expect the bear market to exacerbate the decline in trade activity due to the ongoing global macroeconomic situation.

Meanwhile, one day traders told ET that they would try different models to see if it would be beneficial for the gray market to continue to thrive in this scenario and stay on the Indian exchange.

Shounak Shetty, 28, from Mumbai, said his daily assets under management have dropped from Rs 1.4 billion in March to Rs 500,000 now.

“I think I’ve stopped most of the work since March 31st, but from Friday I’ve subdivided it into smaller pieces. This fiscal year I tested with a small account and any model is still profitable. Check to see if, “said Shetty, Cryptographic Portfolio Manager. “Like any other trader, I’m wondering if I can maintain profits on Indian exchanges, which has led to the brain drain of professional traders to other countries like Dubai and is more welcomed. “Masu,” said Shetty.

Another Mumbai trader who demanded anonymity said, “Whatever the small deal I made on the Indian exchange, I’m quitting now.”

“The peer-to-peer market for cryptocurrencies with thousands of direct buyers and sellers in India will be further traded on decentralized exchanges or international exchanges. Unfortunately, unless government regulations make cryptocurrencies and user friendly. These small gray markets will continue to grow, “he said.

Impact on exchanges

ET’s senior exchange executives said the new TDS rules would lead to volume consolidation.

“On the consumer side, we’ll consider how different platforms implement it and what’s most beneficial to them,” said Unocoin co-founder Sathvik Vishwanath. He said both private investors and exchanges are in a bit of a panic.

“Trading platforms want to make sure they implement the process for deducting TDS correctly because each platform has a different model. Everyone is careful to make sure everything is as planned. I’m watching, “said Vishwanert.

Some exchanges have enough loot to survive the current market, while others are considering diversifying into other areas or developing international markets. Cryptographic trading platform Coinswitch Kuber will launch its first financial services product by this year.

According to Klebaco, industries hit by new tax laws introduced during this year’s union budget have already seen a 40-80% plunge in June compared to March. Billing some of the trading activities is the main source of income for the exchange.

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