Trading Volumes Plummet 70% on Indian Crypto Exchanges as New Tax Kicks in

• Trading volumes at four Indian crypto exchanges plunge by 60% or more after tax.
• High-frequency traders, market makers are ‘gone’.

Warnings from Indian crypto exchanges that a controversial new crypto tax would erode cryptocurrencies trading are becoming realities, with trading volumes evaporating since the levy took effect.

Data from CoinGecko shows that three crypto exchanges — CoinDCX, ZebPay and WazirX — dropped by 60% to 87% in the value of daily trading immediately after the 1% TDS took effect on July 1. A fourth, Giottus, saw a 70% trading sink, said its chief executive.

Those steep declines came from already depressed trading levels, as a combination of plunging prices, unfavorable tax treatment and difficulty getting cash onto exchanges combined to depress the once-hot market.

Binance-backed WazirX, for example, did $3.8 million worth of trading on July 2, the day after the tax known by the acronym TDS took effect, CoinGecko data show. In early July last year, it would have taken less than two hours of trading to reach that mark. (Crypto exchanges trade 24 hours a day, seven days a week).

While long-term cryptocurrency holders are still buying and selling, high-frequency traders and market makers are “gone,” said WazirX Vice President Rajagopal Menon. Traders are also doing more peer-to-peer trading and migrating to so-called decentralized exchanges (DEXs), he said.

The government introduced a tax regime for digital assets in February, including TDS and a 30% flat tax on crypto investments income. It also bans offsetting losses on such assets, treating them differently from bonds and stocks.