- India’s crypto tax regime came into effect on July 1, 2022.
- Exchanges like CoinDCX, WazirX and ZebPay have seen their trading volume drop by up to 87% since the policy took effect.
- Bloomberg said high-frequency traders and market makers could increasingly take advantage of other options.
- Decentralized exchanges could become the preferred destination for traders.
- Indian officials first announced its crypto tax structure in February 2022, as reported by EWN.
Indian cryptocurrency exchanges have seen their trading volumes weakened following the introduction of a 1% tax policy on digital assets which came into effect on July 1, 2022.
Bloomberg reported on Tuesday that trading platforms saw a massive drop in daily trading activity. According to the news house which cited data from CoinGecko, four exchanges, including some of India’s largest digital asset platforms like CoinDCX, WazirX, ZebPay and Giottos, saw transaction declines of up to 87%. %.
According to the report, trading volumes on exchanges have declined by an average of 60% to 70%.
As day-to-day business activity declines, another phenomenon has also emerged in the wake of India’s latest tax regime. WazirX VP Rajagopal Menon opined that high frequency traders and market makers are now ‘gone’
Menon speculated that decentralized exchanges like Uniswap and peer-to-peer trading platforms could become the preferred option for Indian traders in the coming months. The VP also noted that long-term hodlers continue to roll out money and pick up tokens during the ongoing market meltdown.
Although other factors such as market uncertainty and token prices may also be behind the reduction in trading volumes, the report highlights that India’s crypto tax policy is the main reason. of the latest trading model.
India’s crypto tax threatens the digital asset economy
As reported by EthereumWorldNews, India first announced a 30% tax on crypto gains in February. The policy was then approved by parliament in March despite strong criticism from local industry players and businesses.
Another 1% withholding tax (TDS) was also introduced. Trading volumes on local exchanges have reportedly slowed since India’s 30% crypto tax regime came into effect on April 1, 2022.
The matter escalated further on July 1, 2022, after the 1% tax was passed.