Crypto trading volumes on major Indian exchanges saw a notable decline on July 1 compared to the day before, after a new 1% tax on all crypto transactions was implemented in the country. However, one exchange still stood out as a winner, with trading volumes rising.
According to trading data from the major Indian crypto exchange WazirX, volume in the bitcoin (BTC)/Indian rupee (INR) market fell markedly on July 1, with the volume remaining depressed in the days since.
From BTC 97 traded on June 30, trading volume fell to just BTC 29 on July 1. Since then, trading volumes in the most important trading pair on the exchange have stayed between BTC 15 and BTC 24 per a 24-hour period.
The same could also be seen on CoinDCX, where trading volume in the BTC/INR pair dropped from BTC 39.96 on June 30 to BTC 13.63 on July 1:
On Bitbns, on the other hand, no drop in trading volume could be observed. Instead, the volume here increased from BTC 50.57 on June 30 to BTC 71.67 on July 1, giving Bitbns the highest trading volume by far for BTC/INR among the three exchanges.
The changes in exchange trading volume happened as a 1% tax deducted at source (TDS) and a 30% income tax on all crypto profits in India went into effect. Notably, the 1% TDS applies to all crypto transactions, including transfers of non-fungible tokens (NFTs), crypto gaming tokens, and other cryptoassets.
In a blog post published last week, Bitbns pointed out that the new 1% TDS does not apply to perpetual futures contracts, which it said it plans to launch “very soon.”
Meanwhile, the reduced trading volume seen among many Indian exchanges suggests that these companies will bring in less money in the form of trading fees, as the widely followed Twitter account Crypto India has warned.
Commenting on the introduction of the new tax, CoinDCX CEO Sumit Gupta wrote on Twitter that although crypto taxation and the government’s effort to regulate the industry is “a welcome move,” the high taxes imposed now could end up doing “more harm than good.”
Gupta added that he has personally seen “extremely talented people”, who he said could have helped the crypto industry in India, leave due to a “lack of positive support from the government.”
The CoinDCX CEO argued that,
“This is a very exciting AND a critical time for India. Decisions we make today will impact India’s position in the web3 space few years from now when the industry is in its full bloom.”
Others commented as well: for example, local crypto trader Shounak Shetty told The Economic Times on Monday that he is unsure if it’s possible to remain profitable with the new taxes.
“Like other traders, I am trying to figure out if it’s possible to stay profitable on Indian exchanges. This will lead to another brain drain of professional traders to other countries like Dubai that are more welcoming,” he said.