The country’s new 30% tax on cryptocurrency, which went into force last year, has continued to put a pressure on India’s biggest cryptocurrency exchanges.
One of the biggest cryptocurrency markets in the world is found in India, where up to 20 million investors are involved in a $5.37 billion industry. But the Indian government passed a 30% tax on cryptocurrency revenues in February of last year. The country’s cryptocurrency exchanges were severely impacted by the new laws, which led trade to drop by up to 70%. Investigating and raiding cryptocurrency companies in search of money laundering operations, Indian law enforcement has further exacerbated the problems facing the sector.
As businesses tighten their belts and try to lengthen their runways, the aftershocks have left crypto exchanges in a scramble, among layoffs, wage freezes, and reorganization. Though not everybody is suffering equally.
India’s leading exchange WazirX is one of the worst affected. According to CoinDesk, the creator of the cryptocurrency exchange transferred the company’s headquarters from Mumbai to Dubai and fought with Binance CEO Changpeng “CZ” Zhao for control of the exchange. The corporation, according to insiders, has a 21-month runway, but this has reportedly come at the expense of 40% of its workforce.
Neeraj Knadelwal, a co-founder of CryptoDCX, recently told CoinDesk that because of the exchange’s investments in DeFi, it has a strong four-year runway and is still hiring. Additionally, CryptoDCX has taken the lead in influencing Indian regulators.
In order to diversify their business models, other exchanges like ZebPay are attempting to attract institutional investments. Giottus, a cryptocurrency exchange based in Chennai, is betting that openly pledging to show proof of reserves will put them ahead of competitors.
CoinSwitch, a company based in Bangalore, has changed its name from CoinSwitch Kuber and is aiming to change course to become a platform for investing in cryptocurrencies. It has to be seen, though, whether India’s new legal framework will actually “kill the industry,” as Binance CEO Zhao asserted, or merely alter it.
