TDS rule brings down volumes on crypto sites

economictimes.indiatimes.com:

crypto exchanges CoinDCX, WazirX and Zebpay declined by at least 70% on July 3 compared with June 30, even as the rule requiring deduction of tax at source on every transaction came into effect on July 1.Volumes on WazirX were down the most at 82%, according to data sourced from crypto research and consulting firm Crebaco. The decline was almost 70% on CoinDCX and 76% on ZebPay. While crypto exchanges say it is too early to know the actual impact of tax deducted at source (TDS) as trading volumes are typically lower on the weekend, some experts said trading would likely remain under pressure.

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In the wake of the crypto market crash, the prices of hardware used to support the mining of crypto assets are also falling dramatically. For example, a high-end graphic card is now almost 45% cheaper compared to its price a few months ago.

“At present, it is still premature to predict the ramifications of TDS. We will be in a better position to understand this by the second week of July,” said Rajagopal Menon, vice president at WazirX. “There has been a fall in trading across the industry as investors shift to hold and there may be another dip as traders see their capital getting locked while trading on KYC-compliant Indian exchanges,” he added. The newly introduced TDS of 1% on the sale and transfer of virtual digital assets will push day traders to move out of Indian exchanges and restratgise their playbooks, senior crypto industry executives told ET. Last year, sustained investor interest led to a meteoric rise in volumes on crypto exchanges. According to industry estimates, the top five to six Indian crypto platforms together clocked $70-100 billion in trading volume in 2021, with WazirX