WazirX, one the largest cryptocurrency exchanges in India, estimatedly saw 65-90% of its business erode after e-wallet Mobikwik disabled its services on the platform over the last few days.
ET was the first to report on April 11 that
due to a lack of clarity on the usage of the Unified Payments Interface (UPI) for processing transactions. US-based Coinbase, which announced its India entry last week, has also hit the UPI roadblock and disabled the service.
Trading volumes on top crypto exchanges (noramlised for the last one year) slid 92-98% on April 10 at one point compared to peaks observed last year, data from cryptocurrency aggregator Coingecko.com showed.
The surge in trading over the past year came on the back of a bull run in the market which led to millions joining the crypto bandwagon in India.
WazirX and ZebPay declined to comment on the impact faced by their businesses.
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The drop in trading volumes is because of a combination of the latest tax guidelines that came into effect on April 1 and refusal by payment aggregators and service providers to work with crypto exchanges, multiple senior executives at crypto exchanges said. The broader cyrpto market has also had a slow start to the year and exhibited bearish trends.
The
new rules levy a 30% tax on crypto gains and do not allow users to offset losses.
Vikram Subburaj, founder and CEO of crypto exchange Giottus, told ET that its service provider cut off UPI access a few days ago.
Crypto exchange Unocoin, too, stopped access to UPI this week, though the company attributes it to “a tech hiccup on their side” which will get resolved in a few days.
“Even after the Supreme Court’s verdict (which overturned the banking bank in 2020) and RBI’s clarification last year (reiterating the Supreme Court’s ruling), the crypto industry is being heavily affected by a lack of access to banking services in India,” said a senior crypto exchange executive requesting anonymity. “Services are cut off every 2-3 months by payment partners.”
ET reported on April 10 that US-based
Coinbase temporarily halted the UPI payment option after it came under the scanner of the UPI railroad operator, the National Payments Corporation of India (NPCI).
When it launched on April 7, Coinbase had said it would allow users to purchase cryptocurrencies using UPI, which brought it under regulatory scrutiny.
The decline in volume will have a proportionate impact on the company’s revenue as these exchanges make money on every trade. Multiple experts said if the current trend continues, several exchanges could fold up in the next six months.
Almost 70-80% of crypto exchanges shut down and failed to survive after RBI’s banking ban on crypto.
“If things continue as it is, there might be a lot of exchange closures, a few will sustain. The idea is you will have to reduce your cost and stay lean. This is the only way you can survive in the market,” said Subburaj of Giottus, which has one million users.
