The government of India has been trying to address the question of cryptocurrency regulations for a long time. However, the Reserve Bank of India kept opposing the transition. Finance Minister of India, Nirmala Sitharaman, conjectured that cryptocurrencies are not viable. However, she later clarified that the government is not planning to impose a crypto ban.
However, this year the Indian government finally decided to address the elephant in the room and imposed a 30% capital gains tax instead of regulating cryptocurrencies. The news made a big negative impact on the cryptocurrency market in the country. Several third-party payment service providers also revoked their contracts with the local cryptocurrency exchanges.
Due to its emerging economy and the second largest population in South East Asia, India is often considered a potent market for cryptocurrency growth. However, the latest data projections emanating from the region prove that all major cryptocurrency exchanges have taken a massive hit after the latest development.
Cryptocurrency analytics firm Crebaco recently shared that exchange markets have lost 70% of their market shares within the small-time bracket of 10 days. It is worth noting that the taxes on the gambling and sports betting sites are the same as cryptocurrencies capital gains. However, the payment platforms have detracted from crypto markets faster than the former.
WazirX’s Trading Volume Drops Significantly
The great market potential of India attracted investors like WazirX and Coinbase to set up their bases in the region. However, Crebo data indicates that WazirX’s trading volume has dropped from $47.8 million to $13.2 million during the last week. Likewise, a local cryptocurrency exchange CoinDCX’s trading volume, went from $12.16 million to $5.76 million.
Coinbase, the regulated and listed American cryptocurrency exchange recently suspended its crypto payments options after the recent changes. Bitbns traffic dropped by 41.29%, and payment services providers such as MobiKwik and UPI also detracted their services from the Indian cryptocurrency exchanges. The massive fallback is likely to wipe out any local cryptocurrency exchanges and leave behind only foreign exchanges that will recover eventually and resume business in the region enjoying a monopoly over the market share.