Amid dropping trading volumes and funding slowdown, industry experts say funding rounds of crypto Indian exchanges are being deferred and their valuations are also expected to take a hit.
Crypto research firm CREBACO Global told BusinessLine that it expects the revenues of crypto exchanges to fall in the next quarter owing to reduced trading volumes, which will, in turn, affect the valuation of these companies. “Although many projects do not kick off during this time, the second funding rounds are being deferred,” said Sidharth Sogani, Chief Executive Officer (CEO) and Founder of CREBACO.
However, Mohnish Wadhwa, CEO of a business consulting firm CapDeck Advisors, said, “Valuation of crypto exchanges is in fact dipping but I believe this is a temporary dip. We still see the likes of CoinDCX raising a new round at a higher valuation and new Web3 projects being launched in India. It will regain the value, because of the kind of investments that Indians hold in crypto ecosystem is substantial.“
Also, crypto exchange Unocoin believes the falling trading volumes and the crash won’t affect the funding. Sathvik Vishwanath, Co-Founder and CEO, said, “the reduction of volumes does affect the top line of exchanges. However, the reduction and increase of volumes keep happening in the crypto industry and hence the likelihood of this affecting Venture Capitalists’ (VC) sentiments is slim.”
Drop in volumes
This development comes at a time when trading volumes of leading crypto exchanges like WazirX, CoinDCX, BitBns and Zebpay have reduced significantly in the last month. Between April 1 and May 21, trading volumes fell by 82.92 per cent on WazirX and 41.28 per cent on CoinDCX, according to the data shared by CREBACO Global.
The drop in volumes on crypto exchanges seems to have been triggered by the new crypto tax rules, which came into effect on April 1. Budget 2022 had proposed that the gains from the sale of virtual digital assets will be taxed at 30 per cent from April 1. Later, the government also clarified that crypto investors cannot offset gains from one cryptocurrency against losses from another.
In the same month, payments app MobiKwik also stopped supporting deposits on crypto exchanges through its wallet, further affecting the trading volumes. MobiKwik was one of the popular payment methods used by crypto exchanges. The trading volumes are expected to fall even lower when the 1 per cent Tax Deducted at Source (TDS) will be applicable on every trade from June 1.
May 23, 2022