While the global crypto market shows initial signs of recovery, the trading volumes of Indian crypto exchanges declined further in August as the bleak crypto winter continues in India. While the average spot trade volumes of top Indian exchanges shrank in July after the Government of India imposed a 1 per cent TDS on the sale of cryptocurrency assets. Volumes continued to decline in August against the backdrop of the WazirIX controversy, which has put 10 additional exchanges under the lens of the Enforcement Directorate, which is probing 10 exchanges to ascertain money laundering by foreign firms via crypto. According to the data shared by Crebaco, cryptocurrency research company, WazirIX, ZebPay and Bitbns, are showing a decline in trading volumes of 18 per cent, 20 per cent and 42 per cent, respectively, between July and August 2022 period.
Since the implementation of 1 per cent TDS by the government in June-end, top Indian exchanges showed a decline in trading volumes. Between June and July, CoinDCX, ZebPay and Bitbns saw a decline of 71 per cent, 49.2 per cent and 22.8 per cent, respectively.
Trading volumes of the Indian crypto market has seen a decline in 2022 as a result of the crypto winter unleashed by the collapse of TerraUSD stablecoin as well as the Indian government’s tax policies on trade of cryptocurrencies.
In the global backdrop, gains seen by the crypto market also fell in August. Last week, cryptocurrencies suffered a sharp selloff as global markets retreated after US Federal Reserve officials reiterated their resolve to keep raising interest rates until inflation is contained. Consequently, Bitcoin erased most of its gains presently at a two-month low. Experts note however that that globally the bear market is in a recovery cycle and trade volumes in global crypto exchanges are continuing to slowly rise. “The recent drop of Bitcoin has not had any impact on trade volumes of global exchanges or created liquidity issues,” said Sidharth Sogani, Founder and CEO of Crebaco Global.
Bitbns has been reporting zero trading volumes for the past week as the police blocked INR withdrawals in relation to a cyber crime case.
Sogani notes that volumes for Indian exchanges will continue to decline as long as the Indian government does not remove the tax burdens on the trade of cryptocurrencies and regulates the exchanges operating in India. “Indian exchanges will continue to face liquidity crunch,” Sogani noted.
Meanwhile, the Reserve Bank of India has shown scant interest in regulating digital assets, a sentiment that is likely deepened from the recent troubles with the ED.
However deterred by the uncertainties in Indian exchanges, most traders are likely to stay away from the market, and the recovery of Indian exchanges will not follow global trends, as per experts.
Sogani also notes that Indian crypto exchanges also need to be more transparent in order to inspire investor confidence.