After a “year to forget,” Indian crypto exchanges remain open for business
The price of bitcoin, the most popular cryptocurrency, has dropped nearly threefold this year, indicating the fate of such digital assets. Crashing prices, regulatory uncertainty, and taxes have put Indian cryptocurrency exchanges in peril. In her FY23 budget, Finance Minister Nirmala Sitharaman proposed a 30% tax on any income derived from the transfer of virtual digital assets.
In July, an additional 1% tax deducted at source (TDS) went into effect. The government clarified that by levying taxes, it was not legalizing cryptocurrencies, complicating the concerns of exchanges. The Reserve Bank of India (RBI) has maintained its tough stance on private cryptocurrencies, calling for their ban. “Please mark my words, the next financial crisis will come from private cryptocurrencies,” RBI governor Shaktikanta Das recently said at the ‘Business Standard’ BFSI Summit. The demise of stablecoins TerraUSD and LUNA in May shook exchanges and drove down prices for all major cryptocurrencies. Exchanges such as BlockFi, and FTX. Following that, the United States began to experience financial difficulties and insolvencies.
A year to remember
The impact of these events on Indian exchanges is compounded by the Enforcement Directorate (ED) raiding some such businesses in the country. “2022 was a forgettable year for Indian cryptocurrency exchanges. We must deal with the tax laws that were announced in the budget. Trading volume has plummeted on all Indian exchanges. There has also been a lot of Fear, Uncertainty, and Doubt (FUD) around other major global crypto exchanges,” WazirX vice president Rajagopal Menon said. WazirX completed around $10 billion in transactions in 2022, down from $46 billion the previous year.
Menon claims that the 1% TDS has driven all volumes from India to foreign exchanges. “Indians love crypto; a Chainanalysis report last year noted that India was one of the fastest-growing crypto countries in the world. “While the sentiment in crypto is negative, most Indians have voted with their feet and are now transacting in foreign exchanges,” he said. Despite the difficulties, Menon stated that WazirX will continue to focus on its core business of cryptocurrency trading. “WazirX’s mission is to make cryptocurrency available to every Indian. “We are laser-focused on that mission, so we will not dabble in mutual funds or fixed-income securities for other financial markets.”
The shock of the FTX collapse
FTX, a cryptocurrency exchange, collapsed over a 10-day period in November. According to an industry news website, Bitcoin, Ethereum, and stablecoin owners removed approximately $19.19 billion in crypto assets from centralized exchanges in just 50 days following the collapse of FTX on November 5. Since then, nearly 356,848 Bitcoin and 4.48 million Ethereum tokens have been withdrawn from crypto trading platforms around the world.
CoinSwitch recently announced the addition of seven new solutions to its portfolio, including fixed deposits, bonds, exchange-traded funds (ETFs), stocks, and mutual funds. “We are in the process of expanding our overall wealth tech offerings to help users diversify their portfolio on our platform a preferred destination for all investment needs. “CoinSwitch will always be a Crypto-first wealth platform,” says the company. “Our goal is to make money equal for all. “We started with Crypto because we thought it was the most underserved,” Singhal explained. vCoinSwitch did not disclose its trading volume for the year.
According to a recent CoinSwitch study, Gen Z users in India accounted for the most crypto investments (45 percent of the total), followed by millennials (34 percent) aged 26 to 35. According to the study, Bitcoin has a 12.12% market share, followed by Dogecoin (11.54%), Ethereum (9.43%), Shiba Inu (6.92%), and Polygon (6.92%). (4.13 percent).