After trade volumes crashed, Cryptocurrency Exchanges staked their future on long-term Products

After trade volumes crashed, Cryptocurrency Exchanges staked their future on long-term Products

 

To draw retail investors with longer-term goals, the exchanges are placing their faith in systematic investment plans, loans, and futures trading

 

Hurt bitcoin exchanges in India are now promoting services like Systematic Investment Plans (SIPs), loans, and futures trading in the hopes that these long-term goods can draw in more retail investors after aggressively spending to promote Cryptocurrency buying in the previous year.

 

The shift away from intraday and short-term trading coincides with new tax regulations and falling cryptocurrency token valuations, which caused a sharp decline in trading volumes on exchanges.

 

Also Read: Tesla Gained $64m On Bitcoin Sales In The Second Quarter

 

Between January 1 and July 14, leading Cryptocurrency Exchanges like WazirX, Zebpay, CoinDCX, and Bitbns saw a wipeout of between 85 and 90 percent of trading volumes, according to statistics from CREBACO Global.

 

One major factor in this was the imposition of 1% tax deducted at source (TDS) on transactions involving virtual digital assets in India beginning on July 1, even as risk-averse investors began to withdraw from cryptocurrencies globally.

 

In order to attract longer-term investors, current Crypto products like loans, SIPs, derivatives, and even fixed deposits are now being promoted by Cryptocurrency Exchanges and businesses.

 

Also Read: Coinbase Exchange Faces SEC Investigation Over Its Crypto Listings

 

Two of these exchanges, Bitbns and WeTrade, even debuted new services to assist clients in avoiding TDS fees and maintaining their Cryptocurrency Investments. The 1 percent TDS paid on transactions over Rs 10,000 has caused great alarm among intraday traders because a significant portion of their cash will get daily locked up in the cycle.

 

Only when these dealers file their tax returns are they able to claim these sums.

 

Additionally, any profits made from trading cryptocurrencies will be subject to a 30% income tax.

 

In the middle of July, Bitbns unveiled a SIP programmer, promoting it as having "zero TDS" and allowing consumers to contribute as little as Rs 75.

 

Also Read: The US Securities And Exchange Commission Is In The Process Of Registering Crypto-Lending Companies.

 

A derivatives platform and term deposit plans with yearly percentage rates ranging from 8% to 40% are already available through Bitbns.

 

The annual compound return on cryptocurrency investments is known as APY.

 

"With the recent drops in trading volume, it is clear that the future of Cryptocurrency Exchanges will be different.

 

Certainly, the sector is facing difficult times, but according to Bitbns creator Gaurav Dahake, I think we have almost reached the bottom.

 

"Users should launch a SIP at this time.

 

Given the lower token values, this can generate substantial gains over time. When it came to offering alternative Cryptocurrency investing alternatives, Unocoin was a pioneer.

 

SIPs were initiated in 2014, and loans followed in 2018. With these two services together, it has more than 2.3 million users.

 

Also Read: Chipotle Takes ‘Buy The Dip’ Literally With New $200K Crypto Giveaway By Cryptohelpexchange

 

"Other exchanges were heavily involved in short-term trade and intraday trading.

 

Sathvik Vishwanath, the Co-Founder of Unocoin, told Moneycontrol that the company is targeting retail investors who plan to hold onto their investments for a few quarters to a few years. TDS won't have a significant impact on us because investors only trade 3-5 times annually. Our clients are more interested in medium- to long-term investing.

 

 

SIPs are already available from CoinSwitch and CoinDCX also offers a platform for trading futures (derivatives).

 

WeTrade, a recently established startup with headquarters in Bengaluru, went above and beyond when TDS was implemented by providing 1% cashback on every investment, zero trading fees, and an additional 1% cashback on every sell, with a monthly cashback cap of Rs 1,000.

 

WeTrade founder Prashant Kumar stated, "To ensure a seamless customer experience, we have waived all transaction fees and paid for the TDS incurred."

 

An NFT on sign-ups and an extra 1% cashback on each coin purchase are among our special rewards.

 

Changing the focus

 

Although the viability of cashbacks has been questioned, Cashaa, a B2B banking-like service provider to the majority of Cryptocurrency Exchanges in India, claimed that by creating enough back-end cashflow, exchanges can easily provide this benefit.

 

"Exchanges can earn income on their assets when they hold reserves with Cashaa.

 

We offered 7 to 8% yearly interest on Bitcoin deposits for institutional investors.

 

"According to Gaurav Kumar, founder of London-based Cashaa, "They (exchanges) can use this money to pay cashbacks or even interest."

 

According to Gaurav, this is also the time that cryptocurrency financing will pick up because many investors would have hung onto their Bitcoins rather than selling them at a loss.

 

"You will see that we'll have at least 10 startups doing it within the next six months.

 

Also Read: Tesla Is BTC Sale And Its Impact On Crypto Market Sentiment

 

This product actually performs better in a bear market than a bull market, according to Gaurav. Many people will currently be stuck with their Cryptocurrency holdings because they need money but don't want to sell them for a low price. Instead, they can borrow against it.

 

However, India doesn't have many crypto lending options, which creates a huge opportunity.

 

According to Vishwanath of Unocoin, lending money for cryptocurrencies would be comparable to lending money for gold because both involve calculating the amount to be given against the value of the collateral—in this case, extremely volatile crypto tokens—using a loan-to-value ratio.

 

The kind of tokens pledged will also affect the type of Crypto Loans.

 

The loan-to-value ratio will be about 60% for more durable tokens like Bitcoin, while it may be between 35% and 40% for other tokens.

 

According to experts, with such possibilities and these market circumstances, the moment may be right for new participants to enter the Cryptocurrency Market for the long term.

 

"I notice a fresh group of folks arriving.

 

A senior executive from one of the biggest exchanges told Moneycontrol on the condition of anonymity that a bear market was the perfect moment to enter the market.

 

Also Read: Binance Fined $3.4 Million By Dutch Central Bank

 

"People will now approach cryptocurrency with a long-term perspective.

 

Numerous institutions and individuals who had previously expressed skepticism about cryptocurrencies are now looking to enter the industry.

 

Regulation fog

 

Nevertheless, despite how exciting these products seem, there is still no legal structure in place for the Cryptocurrency Industry.

 

Products like mutual funds, SIPs, and lending are heavily regulated and overseen in the traditional equities markets and the banking industry by organizations like the Securities and Exchange Board of India and the Reserve Bank of India. An increase in alternative cryptocurrency offerings can also come under the RBI's scrutiny because of its adamant opposition to Cryptocurrencies.

 

On July 18, Nirmala Sitharaman, the minister of finance, stated that the RBI has advised the government to outright ban cryptocurrencies.

 

Vishwanath stated the industry is currently unregulated as far as SEBI or RBI comparable governing agencies are concerned when asked about the legality of such sales.

 

We don't even yet fall under SEBI, therefore we don't even have any of these rules.

 

Due to the lack of rules, these items are available. And when regulations are in place, it will either be fixed, changed, or possibly continued.

 

Crypto SIPs and cryptocurrency itself are not currently regulated.