NEW DELHI : The ongoing spat between crypto exchanges WazirX and Binance could reduce the number of crypto tokens the former lets users to deal in and could also impact other exchanges in India that depend on WazirX for liquidity.
Binance, the world’s largest cryptocurrency exchange, continues to provide liquidity for crypto-to-crypto trades, as opposed to INR to crypto, on WazirX despite having shut down off-chain transfers, or those not registered on blockchains, between the two platforms, said a person close to WazirX.
The person, who did not wish to be named, said WazirX has not severed its “umbilical cord" with Binance and that its crypto wallets continue to be controlled by the foreign entity. “When someone places an order for cryptos, it has to be fulfilled by somebody. That’s called a liquidity bot and it’s (the bot) controlled by Binance," the person said.
“Because the trading volume was very high (on WazirX), in the good days, it had enough liquidity from Indian buyers and sellers itself. But after TDS (1% tax deducted at source from July 1), everything went for a toss, because everyone has left (from all Indian exchanges) and only the core hodlers remain," he said. Hodlers refers to people holding long-term positions in cryptocurrencies.
WazirX’s link to Binance is also the source of liquidity for exchanges such as CoinSwitch and CoinDCX, both of which use automated tools to draw liquidity from WazirX, among other platforms.
According to data from cryptocurrency researcher Crebaco Global, average daily trading volumes for Indian cryptocurrency exchanges WazirX and CoinDCX were $9,675,215 and $7,791,357, respectively, in June. For the first 14 days of July, daily average trading volume of WazirX fell 71% to
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