Investor interest in crypto trading has seen some revival over the last few days, with exchanges trying to resolve payment challenges, but sentiment remains muted over tax provisions.
A number of exchanges BusinessLine spoke with said bank transfers continue to work for them.
“Our banking partners and payment gateways continue to work. It is not a deterrent for now,” said the head of a crypto exchange, noting that many small and mid-sized private banks were willing to work with crypto exchanges.
Others like WazirX are in talks with banking partners.
“Currently, there is reluctance from the banking industry to provide crypto exchanges channels to deposit funds. However, we are in conversations with banking partners to iron out the issue at the earliest and help provide our users with other faster and hassle-free depositing methods. The provision of taxes ascertains that crypto is not a shadow industry; hence we hope to see banks resume operations with the industry soon,” said Nischal Shetty, Founder, WazirX.
It has been a difficult month for the sector, which was already struggling with the new tax provisions. Trouble mounted after crypto investors were no longer able to use UPI for payments earlier this month.
“Recent collective denial of payments access to exchanges is without legal basis and against the verdict of the Supreme Court passed in the IAMAI versus RBI case,” said Mohammed Danish, Chief Legal Officer at Bitdrive Exchange.
Exchanges said concerns over tax issues remain paramount for investors and more volatility is expected until July, when the one per cent tax-deducted-at-source will kick in.
Praveen Kumar, founder and CEO of Belfrics Group, said the exchange has been impacted by tax issues, not so much by payment problems.
“Our future activities have been hampered. We are just starting in India and were planning to ramp up the onboarding process and trading activities. This has slowed down due to TDS and tax worries,” he said, adding that there is also huge volatility globally.
Nevertheless, new investors have started to come in, he said. Trading volumes at the exchange have increased by 20-25 per cent post April 15, compared with the previous fortnight, he said.
However, according to data shared by crypto research firm Crebaco, trading volumes have continued to nosedive at major exchanges since the beginning of the month, with a few spikes on days like April 11.
“The trading volume has increased due to global market conditions. Globally, crypto markets have become a little bullish as Bitcoin has seen a major support at $40,000. This has led to a ripple effect in Indian exchanges also. Existing active traders have started to trade again. But, overall, trading volumes are still depressed in Indian markets. The 30 per cent tax is a big issue along with problems in payments through UPI,” said Sidharth Sogani, Founder and CEO, Crebaco.