With token prices plummeting, customers unable to transfer money to their accounts and a formidable transaction tax on cryptocurrencies just around the corner, stock exchanges such as Binance-backed WazirX have put expansion plans behind them.
“We have cut all our non-significant costs,” said Rajagopalan Menon, Vice President of WazirX. “We are only hiring important employees, we are not wasting money at all. It’s literally a cryptic winter here, “he said, using industry jargon for a widespread bear market.
WazirX is not alone. The rival trading venues Unocoin and BuyUcoin are also responding to declining trading volumes in the market, which last year was in second place in the world before the introduction of cryptocurrency.
That the cryptocurrency market should be cost-cutting is hardly surprising – Coinbase Global Inc. and Crypto.com have announced redundancies in the last two weeks alone – but the Indian Stock Exchange is facing an increased burden of a new tax system that executives fear will wipe out the little that remains. The daily volume of WazirX has fallen by 95% since October, data from CoinGecko show.
On July 1, a 1% deductible tax on all digital asset transfers over a certain size will take effect, despite industry warnings that it will reduce liquidity. This is on top of the current 30% share of revenue from such assets as well as the planned VAT increase that is gaining ground in the bureaucracy.
The government also does not allow the offsetting of trade losses on cryptocurrencies, treating them differently from stocks and bonds.
To add to the pain, cryptocurrencies have been largely shut down from the regular banking system since mid-April. It was when everywhere near India’s India’s connection was made inaccessible to them without explanation, that some banks and payment gateways also turned off services, which in turn meant that merchants could not replenish their accounts with cash.
It’s an incredible turnaround from last year, when India was one of the hottest cryptocurrencies in the world. The country’s cryptocurrency market grew more than 600% in the 12 months to June 2021, according to a Chainalysis researcher who used a measure that measures the total amount of cryptocurrencies received in a country.
Crypto exchanges took out full-page newspaper ads and listed Bollywood stars to promote their offerings to one of the world’s youngest residents. Coinbase-backed CoinDCX became the official title sponsor of a cricket show between India and Sri Lanka.
“Last year was the golden age,” Menon said. “We went from six programmers to 50 in seven months. WazirX has only added “a few developers and a few key seniors” since the recruitment campaign, he said.
Not everyone is braking. CoinDCX, which raised $ 135 million in April from funds including Pantera Capital, does not intend to cut costs, said Vinay Tiwari, deputy chief financial officer, in an interview.
That makes it a spin among stock exchanges.
BuyUcoin, a small stock exchange with 45 employees, only employs engineers and engineers, said CEO Shivam Thakral. It is also cutting spending on things like collaborating with social media influencers and avoiding mass advertising, according to Thakral. BuyUcoin’s trading volume has fallen by 80% from its peak last year, he said.
“All companies are cautious when it comes to spending now, as we are,” Sathvik Vishwanath, CEO of Unocoin’s cryptocurrency exchange, told Bloomberg. “We continue to hire key positions but are not hiring redundancies.
Vishwanath said he would assess the impact of the trade tax, known by the acronym TDS, before making major policy decisions. The industry agency of which he is a member put ineffective pressure on the government for a reduction in TDS, he said.
With no immediate relief in sight, current WazirX employees may have to do more work.
“If someone leaves the company, the first division was almost immediate,” Menon said. “Now we are looking at whether anyone can double in that position.
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