Crypto unicorn CoinDCX anticipates tax reduction in India

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Indian crypto unicorn CoinDCX claimed that the 1% TDS on crypto transactions introduced by the Indian government in 2022 has had a detrimental impact on digital asset trading, rendering it ineffective.

The tax was introduced in July 2022 to track the buying and selling of cryptos in India. However, the levy has driven 95% of Indian crypto trading volumes to overseas platforms that are difficult for local officials to monitor.

“The whole purpose of the TDS was to track and trace transactions but that is getting defeated,” CoinDCX CEO Sumit Gupta said in an interview. He expects the government to lower the tax in response. 

Before the tax levy was imposed, CoinDCX was valued at over $2 billion. Currently, its revenues are at one-third of the levels recorded before the tax levy, reported Gupta. He added that compliance expenses have increased following India’s anti-money laundering legislation application to the crypto industry.

In response to the financial challenges, the company laid off 12% of its workforce in early 2023, which brought its total employee count down to 550. Gupta stated that CoinDCX has operating bank cash and revenue to sustain itself for five more years. Additionally, he expressed his expectation for more regulatory clarity by the end of 2025, following the general elections in 2024.

Amidst the struggles, CoinDCX has sought to diversify its revenue streams by exploring crypto opportunities abroad and expanding into different projects.

The company recently led a funding round in BitOasis, a crypto platform focused on countries such as the United Arab Emirates (UAE), Saudi Arabia, Bahrain, and Kuwait. This investment was to help CoinDCX expand its reach into these new markets.

CoinDCX is also building a crypto wallet called Okto that allows coin holders to delve deeper into decentralised finance. It aims to help CoinDCX to attract new users who are interested in DeFi.

Despite a drop in trading activity on Indian exchanges, the country is adopting crypto via offshore trading and blockchain-based financial services. According to Chainalysis data, India received $250 billion worth of crypto through June 2023, second only to the US, which received over $1 trillion.

India continues to be among the top adopters of crypto services in the world despite the lack of regulatory oversight and a high tax bracket. With improved regulations, the country could witness a boost in innovation and digital asset trading.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash