Trading volumes on cryptocurrency exchange firms in India decreased by about 15% to 55% after the recent tax legislation, which took effect on the 1st of April. Additionally, analysts fear that liquidity may be impacted by the 1st of July implementation of legislation that states that a 1% tax be deducted at the origin of every crypto transaction. 

According to reports, crypto firms in India have reported substantially reduced traffic since the latest tax rules came into place.

Crypto Trading Volume Dip In India

Local media sites report that trade volumes fell 15%–55% during the first days of April, citing industry experts and analysts. Also, domain activity on Indian cryptocurrency exchanges has decreased by about 40%.

Aditya Singh, the founder of the Crypto India exchange, also tweeted a graph illustrating how trade has decreased. WazirX, another popular cryptocurrency exchange in India, saw trade volume fall to below $100 million from an initial $208 million at the start of the month.

Indian residents would now need to struggle with draconian tax regulations that take about a 30% chunk of their cryptocurrency revenues. Additionally, every transaction is subject to a 1% source tax. Also, crypto investors are not permitted to balance their losses against profits made by other traders.

This upcoming tax collected at origin law takes effect on the 1st of July, but investors are already scratching their heads. Most executives anticipate this will impact market stability, as regular traders may restrict their trading activity to avoid losses. This is the regulation that has the crypto industry most concerned about the status of cryptocurrency trading.

Manhar Garegrat, CoinDCX’s executive director in charge of policymaking, said the following about the TDS law:

“The markets will be devoid of liquidity. Buyers’ trades will no longer be performed as effectively as it is now and this inefficiency will ultimately suffocate the whole economy.”

India Is Circumspect Regarding Cryptocurrency

India said it would await global agreement in a similar development before implementing a broad crypto regulatory regime. By regulating the market, policymakers indirectly acknowledge the existence of crypto, despite their persistent refusal to make it legal means of exchange. 

This is the position taken by the majority of governments, and just a handful, such as China, have entirely banned virtual currencies. Although India is not among the friendliest country, its investors should take solace in the fact that they are able to retain their investments.

The Indian government has decided to embrace crypto instead of a total ban. However, the nation is interested in developing its blockchain technology. The authorities are currently developing an electronic Rupee.