Crypto Exchanges Suffer in India, But The RBI Doesn’t Give Up On The Blockchain

In India, the downturn in the crypto market and the government’s overly restrictive control over the industry have caused many exchanges to suffer, not only because of a decline in adoption but from regulatory uncertainty.

Meanwhile, the “anti-crypto” Reserve Bank of India (RBI) continues to work on its pilot project to introduce blockchain technology into the banking system.

WazirX Volume Drops 95% Over The Last Year

On June 25, Bloomberg reported that as the big names in the crypto industry are laying off their staff, most Indian businesses are trying to walk cautiously as they prepare for the crypto winter and new tax rates.

According to Bloomberg, trading volume on WazirX, one of India’s fastest-growing cryptocurrency exchanges, fell 95% since October last year due to new tax regulations.

Rajagopalan Menon, vice president of WazirX, told Bloomberg that last year was the golden age for the company because they went from having six programmers to hiring fifty in just 7 months.

However, he assured that although they do not plan to any major layoff spree, the company is cutting all non-critical costs in order to survive the crypto winter, so they are only hiring key positions.

“We are hiring only critical hires, we aren’t spending money at all. It’s literally crypto winter here,”

The crypto winter is not only affecting Indian exchanges. All around the world, cryptocurrency exchanges and  other businesses in the industry have been forced to reduce their staff in order to cope with the crypto winter. Crypto.com, Coinbase, Gemini, Robinhood, Bitso, Bybit and Blockfi are just a few of the platforms that have been going through a staff reduction. And for those who want to know more about the situation in India, Cryptopotato recently reported that the local  crypto exchange Vauld also laid off 30% of its total workforce.

The financial outlet Business Insider estimates that crypto businesses fired over 1700 people in June alone.

India Introduces New Taxes On Cryptocurrency Activities

It should be noted that right now, India is taxing crypto trades with 30% on the obtained revenues, not to mention a new tax that will come into effect on July 1, which will deduct 1% on all transfers made through cryptocurrencies.

Therefore, the country is no longer considered as good for the crypto industry as it was a few months ago when the sector grew 600%, according to Chainalysis. In fact, right now, the trend is the exact opposite.

However, the Reserve Bank of India —the country’s central bank— is working on a pilot project in conjunction with other state-owned banks and international companies such as IBM to implement blockchain technology in the fight against fraudulent activities that stalk the country’s banking system.

This means that, although the government continues to squeeze cryptocurrency companies, it is aware that the technology behind them can be a valuable tool to help them exercise greater control on the financial system and prevent illicit activities and tactics.