Crypto Trading Volumes are Unlikely to Recover Anytime Soon: Experts
The crypto trading volumes have plummeted dramatically this year in India. The FTX meltdown has further aggravated the problem, hurting "the sentiment across crypto tokens." Crypto experts are not expecting a recovery shortly "unless something dramatic happens" in the upcoming Union Budget.
The Crypto Market has been ‘Dead’ Since April
Cryptocurrency
trading volumes at major exchanges in India have plunged significantly this
year. Since the collapse of crypto exchange FTX, major exchanges in India have
lost between 34% and 50% of trading volumes, Moneycontrol reported on Monday,
citing data from research firm Crebaco. However, the decline began long before
the FTX implosion. One of the largest crypto trading platforms in India,
Wazirx, lost 97.99% of its trading volumes from the beginning of the year to
December 22.
Crebaco
CEO Sidharth Sogani said, "I don’t think a lot of this recent trading
volume plunge was driven by FTX. The market in India has been dead since April
2022."
Sogani
added, "I don’t expect any action or recovery for the sector in India in
the next six months until something major gets announced in the Union
Budget," he continued.
Vice
president of marketing at Wazirx, Rajagopal Menon, said, "It all comes
down to removing or reducing the TDS (tax deducted at source) and capital gains
without setting off for losses. No one is trading on Indian exchanges because
of that."
The
Indian government imposed a 30% income tax on virtual digital assets, including
cryptocurrencies and non-fungible tokens (NFTs), and a 1% TDS on all
transactions of INR10,000 ($121) or more in the Union Budget 2022.
Menon
added, "Unless something dramatic happens in the budget this year, we
don’t see a steady recovery in trading volumes anytime soon."
FTX's Collapse and the Impact on India
"Indian
users have not been too badly affected by FTX except for the sentiment. The
negative sentiment around the sector got exaggerated by FTX," a top crypto
exchange executive clarified. He explained:
"Indian
investors, after TDS, have moved to Binance and not FTX because Binance has
peer-to-peer (P2P) transactions and FTX doesn’t. If you have INR, the only
foreign exchanges you can trade on are Binance and Kucoin."
Sogani
similarly explained that the FTX meltdown hurt "the sentiment across
crypto tokens." He added, "What came out, later on, has pushed the
crypto industry behind by a few years."
Meanwhile,
India has yet to come up with a crypto policy. The Indian government is
planning to discuss crypto regulations with the G20 countries to establish a
technology-driven regulatory framework for crypto assets, the country’s finance
minister had revealed on a previous occasion. The government recently updated parliament
on the status of its cryptocurrency bill.
The
Reserve Bank of India (RBI) has continued to push for banning all
cryptocurrencies, including bitcoin and ether. RBI Governor Shaktikanta Das
recently said that the next
financial crisis will come from crypto if it
is allowed to grow.
Do
you think the government of India will announce something positive for the
crypto industry next year? Please post your comments.
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