The implications of what anti-crypto regulations can do to a thriving economy can be seen first-hand unfolding in India. Supporting the massive decline in trading volumes across all Indian crypto exchanges, a report from WazirX reveals a change in investor sentiment as the Indian government imposed its second crypto law — a 1% tax deduction at source (TDS) on every crypto transaction.
Trading volumes on Indian crypto exchanges saw an eventual reduction of 90-95% ever since the country introduced a law that would tax investors 30% on unrealized gains. With two consecutive taxes ready to eat away at their holdings, most Indian investors have seemed to have opted for hibernation amid an unforgiving bear market.
Prominent Indian crypto 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 owing to the TDS deductions.
Another method investors in India avoided paying TDS was by selling their holdings before the taxation was signed into law. Over 27% of the investors, the majority comprised of millennials, ended up selling 50% of their portfolio before April 1 whereas 57% sold under 10%. In this regard, Rajagopal Menon, VP of WazirX stated:
“The survey results stipulate the need to reform certain conditions to aid the growth of crypto investors in the country which will result in economic prosperity. The tax regime needs to be balanced to encourage participation and revive trading volumes.”
With Indian investors eyeing international exchanges to circumvent taxes comes the risks associated with trading on non-KYC compliant exchanges with little or no oversight. ZebPay CEO Avinash Shekhar added:
“While India’s crypto tax policy is a step forward, reconsidering certain aspects will help build a more supportive regulatory environment for all industry stakeholders and will ultimately contribute to overall economic progress.”
Related: Bollywood A-lister-backed GARI token plunge sparks rug pull rumors
GARI, a token launched by an A-list celebrity from Bollywood, Salman Khan, plunged 83% in value in a matter of hours on Monday. While GARI Network brushed off the price depreciation as a “market event,” investors suspected a rug pull event.
Out of the lot, nearly 2,300 or 24% of the surveyed investors shared their interest in trying out international crypto exchanges to avoid paying TDS during trade cycles while 29% confirmed to have drastically reduced their trading activities.
GARI Network conducted an internal evaluation and found no evident hacks that could topple the token’s prices. The company stated:
“So far this looks like a market event. We assure our community that ALL tokens are safe in the respective reserves.”
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