Crypto trading volumes in India have plunged significantly this year. The FTX meltdown has exacerbated the problem, hurting “the sentiment across crypto tokens.” Local crypto experts are not expecting a recovery in the near future “Unless something dramatic happens” in the upcoming Union Budget.
Indian Crypto Market ‘Dead’ Since April, Says Expert
Cryptocurrency trading volumes at major exchanges in India have plunged significantly this year. Since the collapse of crypto exchange FTX, major exchanges in India lost between 34% and 50% of trading volumes, Moneycontrol reported 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 Dec. 22.
Crebaco CEO Sidharth Sogani told the publication:
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.
“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.
Wazirx’s vice president of marketing, Rajagopal Menon, opined: “It all comes down to the removing / reducing the TDS (tax deducted at source) and capital gains without setoff for losses. No one is trading on Indian exchanges because of that.”
In this year’s Union Budget 2022, 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 10,000 rupees ($121) or more.
Unless something dramatic happens in the Budget this year, we don’t see a steady recovery in trading volumes anytime soon.
How FTX’s Collapse Impacts Indian Crypto Industry
“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 told the publication. The person elaborated:
Indian investors, after TDS, have moved to Binance and not FTX because Binance had peer-to-peer (P2P) transactions, 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 still has not come up with a policy on crypto. The Indian government is planning to discuss crypto regulations with the G20 countries in an effort to establish a technology-driven regulatory framework for crypto assets, the country’s finance minister previously revealed. The government recently updated parliament on the status of its cryptocurrency bill.
India’s central bank, the Reserve Bank of India (RBI), has continued to push for the banning of all cryptocurrencies, like bitcoin and ether. RBI Governor Shaktikanta Das recently said that the next financial crisis will come from crypto if it is allowed to grow.