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

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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.

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