BENGALURU: Crypto exchanges in India continue to face many challenges apart from a new tax regime -- 30% tax on crypto income -- that came into effect from April 1. All major crypto exchanges have suspended INR deposits for cryptocurrency purchases through the most popular UPI payment option, and it is said that banks too have pulled support from exchanges.
Two weeks ago, an executive from US crypto exchange Coinbase said at a conference that crypto investors could use UPI to transfer funds. Soon after this announcement, the National Payments Corporation of India (NPCI) said it was not aware of any crypto exchanges using UPI.
After NPCI’s statement, apart from Coinbase, many exchanges suspended INR deposits and some banks too have pulled support from exchanges. It is said that trading volumes of the exchanges too are declining -- at least 50% -- for the past few weeks.
Though many exchanges refused to comment on trading volumes and suspension of rupee deposits through UPI, the biggest crypto exchange WazirX said that currently there has been reluctance from the banking industry to provide crypto exchanges with channels to deposit funds.
“However, we are in conversations with banking partners to iron out the issue at the earliest and help provide our users with other faster and hassle-free depositing methods. The provision of taxes ascertains that crypto is not a shadow industry; hence we hope to see banks to resume operations with the industry soon,” said Nischal Shetty, founder, WazirX.
The challenges that crypto investors are facing today can lead to an array of disadvantages for the entire system. It can also lead to traders transacting on P2P exchanges instead of the Indian exchanges that are KYC compliant, he added.
Is WazirX moving out of India?
"Under such unfavourable circumstances, we will see more and more start-ups in crypto and Web3 move abroad. We must stop this brain drain by bringing in more conducive and concrete policies that will help us make in India," he said.
When asked whether WazirX has plans to shift its operations to Dubai, the exchange in a statement to TNIE said, "We are a remote-first organisation with employees from over 70 locations. This gives all the company employees the option to work from anywhere, subject to their comfort and convenience unless they are required to travel officially. WazirX is headquartered in Mumbai and Bengaluru, and there is no change in any of our operating procedures. It is business as usual."
Dubai-based Gather Network founder and CEO Reggie Raghav Jerath said that the new implementation and the high tax rate are not beneficial for the overall outlook. "Some top projects in the world incorporated in India, based in India are slowly moving away. It is the same with traders, any largely profitable trader will look to move their profits outside and work with outside exchanges," he said.