In 2023, the trading volume on WazirX, a leading Indian cryptocurrency exchange, plummeted to $1 billion, marking a stark decline attributed to mounting regulatory scrutiny within the Indian market. This dip was compounded by a global downturn in digital asset values and equities.
Compared to the previous years, the total cryptocurrency trade volume on WazirX fell significantly. It witnessed a staggering 90% drop from the $10 billion recorded in 2022 and a staggering 97% decline from the $43 billion seen in 2021.
Despite these substantial setbacks, WazirX attempted to put a positive spin on the latest figures by highlighting the $1 billion trading volume in a public statement released on Tuesday. However, the exchange refrained from acknowledging the significantly higher levels observed during the peak of the crypto craze in 2021 or even in 2022 before the substantial market decline.
This drastic decline in trading volume aligns with WazirX grappling with mounting regulatory pressures imposed by Indian authorities, jeopardizing the once-thriving crypto sector in the country. India initiated the taxation of virtual currencies last year, imposing a 30% tax on gains and a 1% deduction on each crypto transaction. Lawmakers in India have consistently commended Prime Minister Narendra Modi for safeguarding citizens against crypto market frauds and drastic asset price plunges.
A report from the New Delhi-based think tank Esya earlier this year highlighted that the local taxation regulations coerced many Indian traders to resort to foreign platforms such as Binance and Coinbase. Notably, Coinbase ceased onboarding new customers in India as a result.
The escalating regulatory crackdown on cryptocurrencies in India has created a chilling effect on local investors who were once enthusiastic about supporting the country’s crypto startups. This unfavorable climate, previously cited by Binance as a reason for cautious expansion in India, has significantly deterred venture capital firms from engaging with the embattled sector, according to insiders familiar with the situation.
Prominent venture capital firms that previously showed keen interest in supporting crypto companies in India have pivoted away from the sector, redirecting their focus toward other industries, as disclosed by individuals knowledgeable about these developments.
