The Indian government began taxing cryptocurrency transactions on July 1 with a 1% tax deducted at source (TDS). CoinDCX, ZebPay, and WazirX have all seen their volumes drop by 60 to 87 percent in the previous five days.
Thus, it is apparent that the amount of crypto trading on Indian exchanges is rapidly decreasing. Over the last two months, retail trade volumes have been impacted by the chaos in the crypto market. This new tax looks to be just another nail in our coffin.
India’s Finance Minister has promised a hefty tax on cryptocurrency revenues as well as a 1% tax on cryptocurrency exchanges. A further fall in transaction volumes is due to the Indian government’s efforts to stifle demand for fiat money on exchanges.
Major Problems Face Indian Exchanges
There have been several worldwide exchanges that have had difficulty with liquidity, but this is particularly true in India because of negative government regulations. Vauld, an Indian exchange, stated on Monday, July 4, that withdrawals would be halted.
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— Vauld (@VauldOfficial) July 4, 2022
Following Terra’s demise, Vauld revealed that it was experiencing serious liquidity challenges due to withdrawals totaling over $200 million. Doubts have been raised about the capacity of such crypto exchanges to secure customer assets after the widespread collapse of such exchanges.
CEO Changpeng Zhao of Binance issued a caution to investors about the dangers of trading on exchanges that rely on venture capital. To entice users, many exchanges provide lucrative annual percentage yields (APY) on cryptocurrency deposits. However, companies often fail to safeguard their consumers in the most desperate of circumstances.