Indian cryptocurrency exchange CoinDCX has found itself in trouble, announcing a massive 12% layoff this week. The decision comes after a sharp drop in virtual currency trading revenue, underscoring the wider challenges facing crypto platforms, especially in India.
CoinDCX’s downsizing move is in line with a global trend that has seen trading volumes on cryptocurrency trading platforms drop significantly over the past year. However, the situation in India has clearly shifted due to government policies.
Trimmed Staff and Alignment Strategies
CoinDCX founders Sumit Gupta and Neeraj Khandelwal detailed the company’s decision in a recent statement. They highlighted challenging macroeconomic conditions and the ensuing cryptocurrency bear market, and highlighted the tangible impact of these factors on their operations.
As part of CoinDCX’s broader efforts to navigate the current turbulent times, the company isn’t just focusing on reducing human resources. Gupta and Kandelwal mentioned that the company intends to shift its strategy towards investing in automation.
This step aims to simplify operations and cut costs, which are critical to ensure the longevity of the platform and market competitiveness.
The duo’s statement sheds light on the global issues facing cryptocurrency-focused businesses, with a particular emphasis on the unique challenges of the Indian market. The statement states:
Startups and corporates around the world are going through challenging times due to the tough macro environment, especially in the cryptocurrency space due to the prolonged bear market and the impact of TDS on domestic exchanges. These factors had a significant impact on our sales volume and revenue.
Ripple Effects of Indian Tax Policy
Cryptocurrency trading platforms in India have historically faced numerous challenges. However, the past year has been particularly turbulent. Cryptocurrency trading volumes have generally declined globally, but Indian exchanges have been more severely affected.
Since the imposition of a 1% transaction tax on cryptocurrency transactions in July 2022, transaction volumes on Indian platforms have plummeted by about 90%, according to Bloomberg.
This transaction tax is called TDS (Tax Deduction at Source), and it particularly affects market makers and high-frequency traders. These entities previously contributed a significant portion of the trading volume.
Their reduced activity clearly demonstrates the knock-on effect of TDS and how it has changed the trading landscape. Meanwhile, the global cryptocurrency market in particular has yet to fully recover from recent losses.
The financial market sector has plunged 0.1% over the past 24 hours and is now worth $1.091 trillion as of this writing.
Featured image from Unsplash, chart from TradingView
