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With token prices plummeting, customers unable to transfer funds to their accounts and a horrific transaction on cryptocurrencies just around the corner, exchanges such as Binance-backed WazirX have put expansion plans on the back burner.
“We have cut all our non-critical costs,” said Rajagopalan Menon, Vice President of WazirX. “We are only hiring the important ones, we are not spending money at all. It really is crypto here,” he said, using industry jargon for an expanding bear market.
WazirX is not alone. Rival exchanges Unocoin and BuyUcoin are also responding to disappearing trading volume in the market, which last year ranked second in the world for crypto adoption.
Should crypto marketplaces be in cost-cutting mode, it’s hardly a surprise – Coinbase Global Inc. And Crypto.com has announced layoffs only in the past two weeks – but Indian exchanges face the added burden of a new tax system that officials fear. Erase whatever little business is left. Data from CoinGecko shows that WazirX’s daily volume has dropped by about 95% since October.
agenciesOn July 1, a tax cut at source of 1% on all digital-asset transfers above a certain size takes effect despite warnings from the industry that it will drain liquidity. This is on top of the proposed Value Added Tax hike along with the existing 30% rate on income from such properties, which is
make your way through bureaucracy.
The government also does not allow trading losses on cryptocurrencies, treating them differently from stocks and bonds.
Adding to the pain, crypto exchanges have been largely cut off from the regular banking system since mid-April. only then IndiaThe U.S.’s ubiquitous United Payments interface was made unavailable to them without explanation, prompting some banks and payment gateways to shut down the service as well, meaning merchants couldn’t top up their accounts with cash. could.
This is a marked change from last year, when India was one of the hottest crypto markets in the world. The country’s cryptocurrency market expanded
over 600% In the 12 months through June 2021, according to researcher Chainalysis, which uses a metric that estimates the total amount of crypto received in a country.
Crypto exchanges take out full page ads in newspapers and sign up Bollywood stars to publicize their offerings to one of the world’s youngest populations. Coinbase-backed CoinDCX became the official title sponsor of a cricket series between India and Sri Lanka.
“Last year was that golden age,” Menon said. “We went from six programmers to 50 in seven months.” He added that WazirX has only added “a few developers and a few important senior people,” as that hiring accelerated.
impressive spending
Not everyone is hitting the brakes. CoinDCX, which
raised $135 million with funds in April Pantera CapitalThere are no plans to cut costs, Vinay Tiwari, its senior vice president for finance, said in an interview.
This makes it an outlier between exchanges.
BuyUcoin, a small exchange with 45 employees, is only hiring developers and engineers, said chief executive officer Shivam. Thakral Told. According to Thakral, this is cutting down on spending on things like partnering with social media influencers and delivering mass ads. He added that BuyUcoin’s trading volume has fallen by about 80% since peaking last year.
“All companies are being cautious when it comes to spending, just like us are,” Satwik Vishwanath, CEO of crypto exchange Unocoin, told Bloomberg. “We continue to recruit for key positions but are not recruiting for redundancies.”
Vishwanath said he would assess the impact of transaction tax, known as TDS, before taking any major decision on the strategy. He said the industry body of which he is a member unsuccessfully lobbied the government for reduction in TDS.
Without immediate relief, existing employees of WazirX may have to work harder.
“If someone leaves the company, the first replacement was close to immediate,” Menon said. “Now, we’re checking if anyone can double up for that position.”
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