Crypto trading has been dealt a double whammy by tax implementation and MobiKwik withdrawing its services across exchanges on April 1 amid unclear regulations. Volumes have fallen further from the last week by over 50 percent on average across crypto exchanges, according to data shared by crypto research firm CREBACO.
WazirX saw a drop of 72 percent while volumes on CoinDCX and Zebpay dropped over 52 and 59 percent respectively.
The MobiKwik wallet was one of the most preferred modes of payment to purchase cryptos across many exchanges, and with that being withdrawn customers are forced to use payment methods like bank transfers. It was also the only wallet being used by exchanges.
Moneycontrol had earlier reported that transaction volumes plunged 55 percent while domain traffic dropped 40 percent on India's top cryptocurrency exchanges in the first two days after the crypto tax came into effect.
MobiKwik's withdrawal of its wallet from exchanges after the implementation of taxation has raised questions on whether the move was to ensure it does not err in the eyes of regulators with the government's stance still unclear on crypto regulation.
"MobiKwik did not give any specific reason for withdrawing its services. We were just told that they won't be partnering with exchanges anymore," said a top executive at a crypto exchange.
Moneycontrol reached out to Mobikwik with queries on the reason behind withdrawing its wallet from exchanges. However, the company refused to comment.
The Reserve Bank of India's (RBI) stance has consistently been against cryptocurrencies. While Governor Shaktikanta Das has maintained that the banking regulator has concerns, Deputy Governor T Rabi Sankar recently called for a complete ban on cryptos, saying they may even be worse than a Ponzi scheme.
Last week, Nasdaq-listed crypto exchange Coinbase forayed into India to start retail trading, but just three days after announcing its plans, it halted the option on purchasing cryptocurrencies through the Unified Payments Interface. Notably, UPI payments as a direct payment method are not allowed on other crypto exchanges as well.
"As we enter the Indian market, we are actively experimenting with a number of payment methods and partners to enable our customers to seamlessly make their crypto purchases. One of these methods is UPI, a simple to use and rapid payment system," said the US-based company in a statement.
India has been one of the largest markets for crypto trading with around 15 million wallets in the country. But with the tax implementation and unclear regulations, only well-funded exchanges will survive over the next few months, say experts.