It is what is being called popularly, crypto meltdown and this is not only restricted to one geography. Recently, Singapore-based Vauld, a crypto trading and lending platform stopped its customers from withdrawing their funds amid capital issues. In another case, Crypto broker Voyager Digital filed for bankruptcy. Huobi Thailand shut shops on July 1. And the list keeps on growing. Back at home, cryptocurrency companies are reeling under the pressure of taxation imposed by the government. “There is no sustainability if we see the complete infrastructure of the crypto market. It’s all shivering and the complete algorithm is faulty. We lack a strong mechanism to sustain in the global market. The implementation of tax has locked up the liquidity which was necessary for markets. Trading has fallen as investors shift to hold their positions,” Raj A Kapoor, founder, India Blockchain Alliance, a think-tank, told FE Digital Currency.
Meanwhile, the one percent tax deduction at source (TDS) on virtual digital assets and cryptos for transactions over Rs 10,000 has seen trading volumes across major Indian exchanges decline by as much as 70%. According to Kapoor, this has hampered the growth of the industry.
Prior to the current market meltdown, the price of cryptocurrencies such as Bitcoin was as high as $67,000 in early 2022. The price had risen from $6,000 in 2020. Recent incidents like Celcius, Luna, Axie, Vauld, and Voyger demonstrated how susceptible the market is to shocks and manipulation, and how much damage an unregulated economy may wreak on the populace. “We are witnessing the crypto-economy continue to lose credibility unless the government acknowledges its presence and regulates to protect the interest of Indian investors. During crypto winter there will be no Christmas without government intervention,” Gaurav Mehta, founder, Catax- Simple Crypto Taxes, an online crypto tax solution, said. Meanwhile, Facebook’s parent Meta has announced it will shut down its digital wallet for cryptocurrency, Novi, on September 1, 2022.