Volumes have been declining from cryptocurrency trading since the controversial new transaction tax took effect, a report by Business Standard stated.
The government introduced a tax regime for digital assets in February, consisting of the TDS and a flat 30 percent tax on income from crypto investments. It also banned offsetting of losses on such assets, treating them differently from stocks and bonds.
Three exchanges - ZebPay, WazirX and CoinDCX have suffered declines of between 60 percent and 87 percent in the value of daily trading immediately after the 1 percent tax deductible at source became effective on July 1, the report quoted data from CoinGecko. A fourth exchange, Giottus, saw trading sink 70 percent, its chief executive told BS.
The steep declines come 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, noted the report.
The report informed that Binance-backed WazirX, for example, did $3.8 million worth of trading on July 2, the day after the tax 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), it added.
While long-term crypto holders are still buying and selling, market makers and high-frequency traders are “gone,” WazirX Vice President Rajagopal Menon told BS. He added that the traders are also doing more peer-to-peer trading and migrating to so-called decentralized exchanges.