Indian Crypto Exchanges Lose 97.1% Trading Volume: $1.2 Trillion at Risk

• Indian crypto exchanges lost around 97.1% of their trading volume between January and October 2022.
• Between February and October, around $3.85 billion in trading volume fled from Indian exchanges to foreign counterparts.
• Indian CEXs lost 15% in trading volume between the tax announcement and its implementation, and another 14% in trading volume between April and June.

Cryptocurrency exchanges in India have seen a sharp decline in trading volume since the country announced a 30% crypto tax levy in February 2022. A new research study conducted by Indian technology policy think tank Esya Centre reveals that the cumulative trading volume on Indian exchanges has dropped from around $4.73 billion in January to just $137.6 million by October 2022.

The study also revealed that between February and October 2022, around $3.85 billion in trading volume fled from Indian exchanges to foreign counterparts such as Binance, Coinbase, and Kraken. The sharp drop in trading volumes of India’s centralized exchanges (CEXs) came after India announced a steep 30% tax on all crypto transactions on February 1, 2022. The tax came into effect on April 1.

The research showed that in the period between the tax announcement and its implementation, trading volumes on Indian exchanges dropped by 15%. After the tax was implemented, Indian CEXs lost another 14% in trading volume between April and June. Around $3.05 billion in trading volume — 80% of the $3.85 billion in total trading volume that was lost during this period — was shifted to foreign exchanges.

The study estimates that if India’s crypto tax continues to be in effect, the country’s CEXs could lose a total of $1.2 trillion in trading volume by 2026. This could be a major blow to the crypto industry in India, as the country has emerged as a major crypto hub in recent years.

Given the magnitude of the impact of India’s crypto tax, industry experts are now calling on the government to reconsider the tax structure and come out with more investor-friendly policies. The crypto industry in India is still in its nascent stages and any significant policy changes could have a major impact on its development. It remains to be seen how the Indian government will respond to the situation and what measures it will take to ensure that the crypto industry in the country remains vibrant and competitive.