Indian Crypto Exchanges Plan Long-Term Future

Indian cryptocurrency exchanges are introducing a series of what they call longer-term investments to try to counter falling crypto prices this year and a drop in business as punitive taxes keep day traders away.

Products include staking to earn interest on cryptocurrency deposits and dollar cost averaging functions to set aside funds to buy crypto on fixed dates, rather than trying to time the market .

Mumbai-based exchange CoinDCX, India’s first crypto unicorn, last week introduced a mobile wallet called Okto that provides access to a range of decentralized finance (DeFi) apps.

“In India, current conditions favor long-term investment products over spot or derivatives trading,” said Amanjot Malhotra, Country Head (India) of Turkey-based cryptocurrency exchange Bitay.

Bitay and other exchanges operating in India saw their business models turned upside down when the government imposed a 30% flat tax on all crypto income from April 1. This was followed by a 1% withholding tax (TDS) on all crypto transactions above 10,000 Indian. rupees (126 USD) from July 1.

The TDS has reduced what is known as scalp trading – buying and selling in seconds or minutes to take advantage of small price movements – because paying 1% on each trade erodes capital, Malhotra said. Forkast in an email response to questions.

“On the other hand, in long-term investment, 1% TDS does not matter because the frequency of investment is too low to affect the user’s capital inflow.”

Skeptical

Trading volumes on Indian exchanges fell by 70% after the 30% tax took effect on April 1, according to a report by crypto researcher Crebaco.

Taxes and hostile regulatory authorities have prompted some companies to leave India for Dubai and Singapore, while others are focusing on new services.

Subhash Chandra Garg, former finance secretary of India and author of “The Ten Trillion Dollar Dream” on the country’s economy, is not sure that the strategy to create new crypto products will work.

“These are all substitutes” for a speculative asset, Garg said Forkast in an interview.

Longer-term investment plans have been successful for equities and other financial products, but if the fundamental instrument does not inspire confidence, related products are unlikely to change that, he said. declared.

This view does not stop Indian stock exchanges from trying.

New ideas

CoinDCX launched a yield-generating product in May that allows users to earn interest on cryptocurrency deposits. So far, up to 13% of the exchange’s active users have invested in the product, said Minal Thukral, executive vice president of growth and strategy at CoinDCX.

The company plans to introduce yield farming in DeFi around staking, and decentralized lending and borrowing to give users more options over assets, Thukral said. Forkast.

CoinDCX has around 2.5 million active users, with a total of 15 million registered on its website and other platforms, Thukral said, adding that the exchange has seen some decline in trading. He did not give specifics.

Indian crypto exchange CoinSwitch is going beyond cryptocurrencies and aims to introduce its first non-crypto product soon, said CoinSwitch co-founder Ashish Singhal, declining to give further details.

“We are on a mission to evolve into a technology platform of wealth by the end of this fiscal year,” Singhal said. Forkast in an email response to questions. However, “we will continue to be crypto first and innovate our crypto offerings as a business,” he said.

CoinSwitch has 18 million registered users and does not share user product data, Singhal said.