India’s top 10 cryptocurrency exchanges worth US$6.25 billion per year
A thriving marketplace.
Indian tax officials say that the total income of the 10 biggest cryptocurrency exchanges is around Rs 40,000 crore, about US$6.25 billion.
"These exchanges tend to show the total volumes both on buy and sell side as their revenue. In many instances, the exchanges themselves buy and sell cryptocurrencies on their own platform," a tax official told the The Economic Times of India.
According to investigators, many of India's exchanges operate at a margin close to 20%, including fees and buy/sell spreads.
These enormous profit margins might not be tax-free for much longer. According to The Economic Times, unnamed insiders have said action has already been taken against top exchanges, including Zebpay, Unocoin, CoinSecure and BtcxIndia.
These actions are reportedly being spearheaded by the country's big banks, including Axis Bank, BSE, HDFC, ICICI and Yes Bank, who have started closing and suspending accounts, citing security concerns and know-your-customer (KYC) laws.
When asked for comment, The Economic Times received an outright denial of any crackdown from Sathvik Vishwanath, promoter of Unocoin, saying it had simply not been contacted by the banks at all. The other exchanges did not reply.
Uncertainty and doubt, if not fear
Reportedly, the freezing has been mostly directed at exchange owners and promoters, many of whom took out bank loans to build up the exchanges. While the trading volume at exchanges has been relatively unaffected, some of the exchanges are suddenly looking at cash flow problems, undermining the security of the entire system.
Banks are still playing an essential role in India's multi-billion-dollar cryptocurrency industry, as the bridge between fiat and cryptocurrencies, much like they are in other countries.
It remains to be seen what kind of effect this will have on India's growing crypto market. Rumours of crackdowns in other prominent crypto-countries have frequently been more than enough to punish the global market, and with these kinds of volumes, it's possible that the weakening of the supports in India could be dragging down global prices.
"We would not like to invest till the taxation part is clarified," an exchange promoter told the Times.