Indian crypto exchange, CoinDCX, finds itself in trouble, announcing a notable reduction in its staff by 12% this week. The decision comes after a stark decline in virtual currency trading revenues, emphasizing crypto platforms’ larger challenges, particularly in India.
CoinDCX’s move to downsize aligns with a global trend where cryptocurrency trading platforms have experienced significant drops in trading volumes over the past year. However, the Indian scenario has taken a distinct turn due to government policy implications.
Trimmed Staff And Realigning Strategy
In a recent statement, CoinDCX founders, Sumit Gupta and Neeraj Khandelwal elaborated on the company’s decision. Highlighting the challenging macroeconomic conditions and the subsequent bear market in cryptocurrency, they emphasized these factors’ tangible impacts on their operations.
As part of CoinDCX’s broader initiative to navigate these turbulent times, the company isn’t solely focusing on reducing its human resources. Gupta and Khandelwal mentioned the firm’s intent to pivot its strategy toward investing in automation.
This step is geared towards streamlining operations and cutting costs, which is pivotal in ensuring the platform’s longevity and competitiveness in the market.
The duo’s statement shed light on the global issues that crypto-focused enterprises face, particularly emphasizing the unique challenges in the Indian market. The statement noted:
Startups and businesses globally are going through challenging times due to tough macro conditions, more so in crypto because of the prolonged bear market and the impact of TDS on domestic exchanges. These factors had a significant impact on our volumes and thus revenues.
The Ripple Effect Of India’s Tax Policy
India’s crypto trading platforms have historically faced myriad challenges. However, the past year has been especially tumultuous. A universal decline in cryptocurrency trading volumes is noticeable globally, but Indian exchanges have felt an exacerbated impact.
Since the introduction of a 1% transaction tax on cryptocurrency trades in July 2022, trading volumes on Indian platforms have nosedived by roughly 90%, according to Bloomberg.
This transaction tax, called TDS (Tax Deducted at Source), has had a particularly debilitating effect on market makers and high-frequency traders. Such entities previously contributed a substantial portion of the trading volume.
Their reduced activity clearly shows the cascading effects of the TDS and how it has altered the trading landscape. Meanwhile, the global crypto market, in particular, hasn’t fully recovered from its recent shed losses.
Over the past 24 hours, this financial market sector has plunged 0.1%, with a value currently sitting at $1.091 trillion, at the time of writing.
Featured image from Unsplash, Chart from TradingView