Trading Volumes on Major Crypto Exchanges Hit Low in 6 Months

Mumbai: Trading volumes on crypto exchanges WazirX, ZebPay and Giottos hit a six-month low on April 10 due to uncertainty surrounding crypto regulations in the country

WazirX, one of India’s largest cryptocurrency exchanges, has seen 65-90% of its business erode after e-wallet Mobikwik disabled its services on the platform in the past few days .

ET was first to report on April 11 due to a lack of clarity on using the Unified Payments Interface (UPI) to process transactions. US-based Coinbase, which announced its entry into India last week, also hit the UPI roadblock and disabled the service.

Trading volumes on major crypto exchanges (normalized for the past year) fell 92-98% on April 10 at one point from peaks seen last year, according to data from the crypto aggregator -currency

The surge in trading over the past year came on the heels of a bull run in the market that led to millions joining India’s crypto bandwagon.

WazirX and ZebPay declined to comment on the impact facing their businesses.

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The decline in transaction volumes is due to a combination of the latest tax guidelines that took effect on April 1 and the refusal of payment aggregators and service providers to work with crypto exchanges, several senior crypto exchange executives said. The broader crypto market also had a slow start to the year and exhibited bearish trends.

The new rules levy a 30% tax on crypto gains and do not allow users to offset losses.

Vikram Subburaj, founder and CEO of crypto exchange Giottos, told ET that his service provider cut off access to UPI a few days ago.

Crypto exchange Unocoin also shut down access to UPI this week, though the company attributes it to “a tech hiccup on their end” that will be resolved in a few days.

“Even after the Supreme Court verdict (which struck down Bank Bank in 2020) and RBI’s clarification last year (reiterating the Supreme Court ruling), the crypto industry is heavily impacted by a lack access to banking services in India,” said a senior crypto exchange executive requesting anonymity. “Services are cut every 2-3 months by payment partners.”

ET reported on April 10 that US-based Coinbase had temporarily suspended the UPI payment option after it came under scrutiny from UPI rail operator, the National Payments Corporation of India (NPCI).

When it launched on April 7, Coinbase said it would allow users to buy cryptocurrencies using UPI, subjecting it to regulatory scrutiny.

The drop in volume will have a proportional impact on the company’s revenue, as these exchanges make money on each transaction. Several experts have said that if the current trend continues, several exchanges could pull back over the next six months.

Nearly 70-80% of crypto exchanges shut down and did not survive after RBI’s crypto banking ban.

“If things continue as they are, there could be a lot of trade closures, a few will hold. The idea is that you will have to cut costs and stay lean. It’s the only way to survive in the market,” said Subburaj of Giottos, which has one million users.

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