India reportedly has more than 11 crore crypto owners, and 54 per cent of those are first-time investors, placing the country among top three countries in terms of crypto adoption. But while the government is tight-lipped on legalising cryptocurrency for transactions, it has imposed a 30 per cent tax on profits and a one per cent tax deductible on source for trading. This has hit the demand for India’s local crypto exchanges, forcing WazirX to lay off 40 per cent of its staff.
Taxes trigger the big switch
Indian exchanges such as ZebPay and WazirX have witnessed a 60 per cent to 87 per cent demand loss, because investors have fled to overseas exchanges to avoid crypto taxes. For instance downloads for Binance trading app, owned by Chinese-Canadian Changpeng Zhao, climbed to 426,000 in India after the exodus from Indian platforms. According to a CoinDesk report WazirX fired 50 to 70 employees, who were informed that they’ll be paid for 45 days, after being hit by the slowdown.
The firm reportedly cited financial stability to serve clients as a reason for the layoff which led to the entire public policy and communication team getting sacked. WazirX’s trading volumes have gone down from 47.8 crore in October 2021 to 15 lakh a year later. Coupled with the apprehension over fluctuations values of cryptocurrencies, the Indian government’s taxes come as a double whammy for local exchanges.
Fake exchanges and fluctuations remain concerns
When the stablecoin Terra Coin and its sister token Luna crashed in May this year, it wiped out investments of more than two lakh crypto owners in India. As the government is yet to introduce a crypto regulation, Indians have been robbed of Rs 1000 crore by multiple fake crypto exchanges so far. While crypto exchanges are under pressure due to new taxes, the Indian government had pulled up 11 crypto exchanges including WazirX, for GST evasion worth Rs 81.5 crore.
