The TDS Rule Reduces Traffic to Crypto Sites
Spot trading volumes on cryptocurrency exchanges CoinDCX, WazirX, and Zebpay fell by at least 70% on July 3 compared to June 30, despite the fact that the rule requiring tax deduction at source on all transactions went into effect on July 1.
WazirX volumes were down the most, by 82 percent, according to data from crypto research and consulting firm Crebaco. On CoinDCX, the drop was nearly 70%, and on ZebPay, it was 76%.
While crypto exchanges claim it is too early to tell what the actual impact of tax deducted at source (TDS) will be because trading volumes are typically lower on weekends, some experts believe trading will remain volatile.
“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 implemented 1% TDS on the sale and transfer of virtual digital assets will force day traders to exit Indian exchanges and rethink their strategies, according to senior crypto industry executives.