Thanks to the current Bitcoin bull run, Indian cryptocurrency exchanges, battling extremely low volume over the past months, are finally witnessing some cheerful moments. A news report in Business Line, which other media outlets quickly picked up, said trading volumes hit a 10-month high on major crypto exchanges in February.
Referring to data from cryptocurrency research firm Crebaco, the report revealed that trades on CoinDCX, WazirX, and BitBNS hit $2.6 million, $3.4 million, and $7.8 million last month. Although these trading volumes are way below their historic highs of 2021, they are the highest for the respective exchanges since June 2023.
India ranked 4th in Chainalysis’s 2022 Global Crypto Adoption Index report and 1st in its 2023 Global Crypto Adoption Index report.
However, due to a harsh regulatory environment, Indian crypto traders are reported to have shifted to offshore trading exchanges. While the government imposed a hefty 30% tax on crypto gains without the provision to offset losses on other coins in a financial year, it is the 1% TDS on virtually all crypto transactions that make traders scared of making more trades.
During the final days of December 2024, India’s Financial Intelligence Unit (FIU) blocked the websites of nine such offshore crypto exchanges for failing to register with relevant government agencies to ensure compliance with Anti-Money Laundering laws. The exchanges impacted by the crackdown are Binance, Huobi, Kucoin, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.
Subsequently, news reports suggested that Indian crypto exchanges have seen a notable surge in trades, deposits, and new user registrations.
In a report, Business Standard quoted Sumit Gupta, co-founder of CoinDCX, as saying, “Since the FIU notification, we have seen a significant surge, with a 2000 per cent increase in crypto deposits, showcasing a strong response from investors to our compliance-focused approach.”
Some Indian crypto exchanges developed innovative marketing plans to capitalise on the opportunity.
CoinSwitch announced the rollout of crypto deposits for over 100 crypto assets on its CoinSwitch PRO platform. This initiative aimed to provide users with a secure and compliant environment to manage their digital assets, adhering to all relevant Indian regulations. CoinSwitch PRO offered a guaranteed 2% cashback on crypto deposits made to the platform to further encourage responsible trading practices.
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