Crypto exchanges hunker down as everything goes wrong in India
India’s largest digital assets exchanges are bracing for a drawn-out crypto winter — one with some unwelcome local twists.
With token prices plummeting, customers unable to transfer money to their accounts and a dreaded transaction tax on cryptocurrencies just around the corner, exchanges like Binance-backed WazirX have put expansion plans on the back burner.
“We have cut down all our non-critical costs,” said Rajagopalan Menon, WazirX’s vice president. “We are hiring only critical hires, we aren’t spending money at all. It’s literally crypto winter here,” he said, using industry jargon for an extended bear market.
WazirX isn’t alone. Rival exchanges Unocoin and BuyUcoin are also responding to vanishing trading volumes in a market that just last year ranked second in the world for crypto adoption.
That a crypto marketplace should be in cost-cutting mode is hardly a surprise — Coinbase Global Inc. and Crypto.com have announced layoffs in the last two weeks alone — but Indian exchanges face the added burden of a new tax system that executives fear will wipe out what little trading is left. WazirX’s daily volume has slumped about 95% since October, data from CoinGecko shows.
On July 1, a tax deductible at source of 1% on all digital-asset transfers above a certain size takes effect despite industry warnings that it will sap liquidity. That’s on top of an existing 30% rate on income from such assets plus a proposed value-added tax increase that’s making its way through the bureaucracy.
The government also doesn’t permit offsetting of trading losses on cryptocurrencies, treating them differently from stocks and bonds.
Adding to the pain, crypto exchanges have been largely cut off from the regular banking system since mid-April.
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