Indian crypto exchanges record higher trading volumes after FIU action on global exchanges

Leading Indian cryptocurrency exchanges are recording higher trading volumes, deposits, and user registrations following Financial Intelligence Unit’s (FIU’s) decision on December 28, 2022, to issue compliance show-cause notices to nine global crypto exchanges along with a request to the IT ministry to block their URLs for not adhering to Indian regulatory norms.

Leading Indian crypto exchange Coin DCX has recorded a sharp increase in deposits post-FIU’s action.

“CoinDCX witnesses a phenomenal 2000% surge in crypto deposits as investors prioritise compliance and security. The fact that CoinDCX is the first FIU-registered entity and ISO-certified is working for us. We have enabled crypto deposits, and the process of transferring virtual digital assets (VDAs) from other platforms to CoinDCX is straightforward and hassle-free,” said Sumit Gupta, co-founder & CEO of CoinDCX, which has over 1.4 crore users on its platform currently. “Even our signups have gone up by 2X.”

Another prominent crypto exchange, CoinSwitch, witnessed a jump in trading volumes. It also reinstated crypto deposits on Thursday, a service which it had suspended last year.

“Between the week preceding and following December 28th, when FIU announced the action, there has been a notable 30–35% surge in trade volumes on CoinSwitch,” said Balaji Srihari, Business Head, CoinSwitch.The Bengaluru-based WazirX witnessed not just higher crypto deposits but also higher transaction amounts.

“The number of crypto deposits on WazirX went up by 250% in the days following the FIU notice. The average transaction amount was also up by 100% during the same period. Seventy per cent of the deposits came from Binance, and the rest 30% were from other exchanges such as Kraken, KuCoin, Bitso, Coinstash, etc.” said Rajagopal Menon, VP, Wazir X.Even smaller Indian crypto exchanges are recording higher transactions as investors return to familiar setups.

“After the latest action by FIU, BuyUcoin has witnessed a 2.5x jump in trading volume on its platform. The fact that we are a FIU-compliant crypto exchange with strict KYC and AML procedures to prevent illicit use of digital assets is working for us,” said Shivam Thakral, CEO of BuyUcoin, India’s second-longest-running digital asset exchange.

Indian crypto investors, who flocked to foreign exchanges due to crypto taxation in 2022, are now slowly returning to local platforms amid uncertainty triggered by the FIU’s recent actions.

Following the announcement in the Union Budget 2022 of a 30% tax on gains, a 1% tax deducted at source (TDS), and no provision to offset losses, domestic centralised crypto exchanges saw a more than 95% drop in trading volumes in February and March 2022.

Executives at Indian exchanges feel that the combination of a broader bull run in crypto, a resurgent Bitcoin, the possible seeding of the Blackrock ETF, and the robust compliance practices of Indian crypto exchanges will bring Indian investors back to local platforms.

According to exchanges, the recent shift was seen largely in Bitcoin and Ethereum virtual digital assets.

Despite the strict positions taken by the Reserve Bank of India (RBI) and the finance ministry regarding cryptocurrencies, India has emerged as the leader on Chainalysis’ 2023 Crypto Adoption Index. This index measures grass-roots cryptocurrency adoption levels across countries.

Indian exchanges had started recording higher volumes in the past few months, with Bitcoin crossing $40,000 in early December after nearly a year and a half of crypto winter.

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