In yet another hit to the Indian crypto market, Indian markets are facing competition from their global peers even after the FTX fallout.
What is happening: India’s cryptocurrency exchanges have lost a significant share of their trading volumes to foreign platforms since February 2022.
Indian exchanges ceded $3.8 billion in trade to foreign ones between February and October 2022.
Why it matters: When it comes to foreign intermediaries, it is easier to convert cryptocurrencies to fiat currency on International exchanges like Binance allowing traders to route funds without intermediaries.
The big picture: In Nov 2021, global players like Binance and Coinbase were at 50% of the volume in India, which increased to 67.6% by October.
This shift can be credited to India’s stringent policy stance, along with the prevailing global market conditions.
The collapse of international cryptocurrency platforms like FTX and Vauld hit global trading volumes, but Indian exchanges like WazirX, CoinSwitch, and CoinDCX suffered the worst.
Backdrop: India’s cryptocurrency market gained traction during the pandemic years, with its total holdings reaching more than $5 billion by February 2022.
But it began shrinking after the Union budget of 2022 announced a 30% tax on gains from trading, along with a 1% tax deduction at source (TDS).
What is being said: “Indian VDA exchanges lost 97.1% of their volume in October 2022 compared to the corresponding volumes in January 2022. In this period, foreign exchanges lost only 36.3%.” according to Bloomberg
Catch up quick: In a new low for India's crypto sector, foreign investors take over as India's competition even after the FTX fallout, Indian crypto investors are now moving their wallets to Binance and Coinbas, reports say.
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