- Multiple reports reveal a decline in crypto trading activity in India.
- This trend has been tied to the recent crypto tax rules in the country.
- Taxes aside, crypto regulations remain non-existent in the country.
Multiple reports show weighty selling and drop in trading volumes across major exchanges in India. It follows the recent enforcement of the country’s new crypto tax rules.
Crypto Traders Spooked By New Tax Rules
As reported by ZyCrypto, crypto traders in India are now bound to pay the same level of tax applied to horse racing and other speculative activities in the country. Starting from the 1st of April, gains made from crypto assets in the country are now subject to a 30% tax without the option to offset losses from other trades with gains made. In addition to this, digital assets are also subject to a 1% Tax Deduction at Source TDS.
Going by recent reports and data, the taxes have undoubtedly shaken crypto traders and investors in the country. Founder of Youtube channel Crypto India, Aditya Singh, on Saturda, shared multiple charts showing a decline and flatlining of trading volumes across major Indian exchanges.
A report attributed to crypto analytics firm CREBACO also confirms this trend. The report said that trading volume across major exchanges like WazirX dropped by 55%, while traffic dropped 40% within the first two days of the tax rules becoming enforceable.
CREBACO founder Sidharth Sogani says, “We did not expect the volumes to drop so significantly. But, this will definitely be restricting the industry rather than growing.” Sogani adds, “Usually the Government puts a high tax on a new thing but gradually brings it down. But, crypto is a global phenomenon, and the repercussions will be much higher.”
Analysts believe that many market participants are still figuring out the impact of the new rules on them. However, they expect the situation to improve when investors figure out a workaround in the coming weeks.
Crypto Community Recommendations And Response
Founder of India’s largest crypto exchange WazirX, Nischal Shetty, on Twitter, said the crypto industry had to become bigger to get the government to shift its tax stance.
His tweet read, “New tax law has come into effect … However, it’s not the end. Governments make mistakes but it is up to the people to get it corrected … One of the best way to get tax reduced is to grow the crypto industry even bigger than what it is … Let’s work on growth.”
Coinbase appears to be towing this line as, despite the new regulations, they have released plans to expand their operations in the country. While crypto taxes have been defined, there is still no word on the progress of the country’s crypto regulation bill.