The implications of what anti-crypto regulations can do to the burgeoning economy can be seen firsthand in India. Supporting the massive drop in trading volumes across all Indian crypto exchanges, a report from WazirX revealed a change in investor sentiment as the Indian government imposed its second cryptocurrency law – a 1% tax deduction at source (TDS) on every crypto transaction.
Trading volumes on Indian cryptocurrency exchanges have seen a final drop of 90-95% since the country passed a law that taxed investors 30% on unrealized gains. With two consecutive taxpayers ready to divest their holdings, it appears that most Indian investors have chosen to hibernate amid an unforgiving bear market.
Notable Indian cryptocurrency exchanges WazirX and Zebpay surveyed around 9,500 active traders from the region to better understand investor sentiment. Unsurprisingly, the survey revealed that 83% of traders were forced to reduce their trading frequency due to TDS cuts.
Another way investors in India avoided paying the taxes payable was by selling their property before the taxes were signed into law. More than 27% of investors, mostly millennials, finished selling 50% of their portfolio before April 1, while 57% sold less than 10%. In this regard, Rajagopal Menon, Vice President of WazirX stated:
The results of the survey state the need to reform some conditions to help the growth of cryptocurrency investors in the country which will lead to an economic boom. The tax system must be balanced to encourage participation and revive trading volumes.”
As Indian investors look to international exchanges to get around taxes, the risks associated with trading on non-KYC compliant exchanges come with little or no oversight. Avinash Shekhar, CEO of ZebPay added:
“While India’s crypto tax policy is a step forward, rethinking certain aspects will help build a more supportive regulatory environment for all industry stakeholders and will ultimately contribute to overall economic progress.”
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Among the many, nearly 2,300 or 24% of the surveyed investors shared their interest in trying international crypto exchanges to avoid paying TDS during trading cycles, while 29% confirmed that they significantly reduced their trading activities.
GARI Network conducted an internal evaluation and did not find any obvious hacks that could cause the price of the token to drop. The company stated:
“So far this appears to have happened in the market. We are assuring our community that all tokens are safe in the respective reserves.”