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During this crypto-winter, worldwide crypto traders have undergone significant losses. The situation is grim, as digital currencies’ worldwide market capitalization has fallen under $1 trillion, which is massively low from its peak of $3 trillion in November 2021.

Although several global problems have slowed market development in 2022, a few are primarily regional.

Take, for example, India.

After India’s Ministry of Finance first announced cryptocurrency taxes, warning bells went off. Still being crisp from the November 2021 bull market, the government planned to apply high tax rates on virtual currencies.

Crypto Exchange Volume Drop By 95%

Crypto India had published a Twitter post discussing the crypto exchanges’ trading volume. The post represents a 90-95% plunge in 3 months since the new crypto laws came into force.

Per the above data, it’s clear that taxes have significantly impacted crypto-exchange activities in India from 1 April.

An identical drop in trading was observed on Indian exchanges when a 30% tax on profitable crypto trades was imposed on April 1, 2022. Within four days, trading volume dropped 44%.

Another thread from Crypto India depicts the top exchange’s trading volume plunge.

As per the Tweet, WazirX’s volumes have dropped by 98%, ZebPay has dropped by 94%, and CoinDCX’s volumes have dropped by 93%. Surprisingly though, Bitbns traffic has dropped by only 17%. Even then, these were all unpleasant statistics, given that the crypto business in India is usually booming.

The Reserve Bank of India (RBI) has increased the TDS on virtual currencies by 1%. As per Section 194S of the Income Tax Act, the tax is levied on transactions exceeding Rs 10,000 per year (per Finance Act, 2022).

What Indian Crypto Community Has To Say ?

“The TDS levy is a modern instance of a tax provision that would be highly detrimental to the crypto industry. The tax provision will not only discourage innovators who have been doing a great job in promoting India as an innovative hub for the industry, but the government too will be at a loss as they will lose out on the possibility to earn massive tax revenue due to the overall decreased transaction volumes,” said Amanjot Malhotra, country head at Bitay, told to BusinessLine.

However, a few experts believe it is too early to ascertain the full effect of the new TDS rules as trading volumes generally slump over the weekend.

“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, told to The Economic Times

On the other hand,few founders believe TDS rule as a positive for crypto businesses.

“Investors can trade now with confidence by paying applicable taxes and crypto entrepreneurs in India can conduct their business without any fear,” said Shivam Thakral, CEO of crypto exchange BuyUcoin, told to the Hindu BusinessLine.

Vauld To Halt Withdrawals

This isn’t only about India, though, but represents the global attitude change toward crypto.

Cryptocurrency exchange platform Vauld announced an urgent suspension of all withdrawals, trading, and deposits on its platform. The Singapore-based corporation went on to say that it was discussing transformation possibilities with its financial and legal consultants.

The Vauld management made this decision due to monetary concerns in the crypto market in several aspects. Nevertheless, this is assumed to be a protective measure rather than a lack of cash.

The loss of trust in Crypto Exchange

Conversely, there is a growing choir regarding holding digital currencies on exchanges.

For example, on Twitter, a Bitcoin trader named Nebraskangooner stated that “maintaining money on exchanges meant losing it all”, while another said, “it signifies disrespecting money.”