Volumes Rise On Cryptocurrency Exchanges As India Moves To Regulate Industry & nbsp | & nbsp Photo credit: & nbspi Stock Images
Key points
- Data from exchanges shows that small investors, with average investments in the range of Rs 2,000 to Rs 10,000, have risen in the last two weeks.
- WazirX saw its trading volumes increase 44% month-over-month on average every month since January of this year.
- BuyUcoin saw its trading volume increase by over 500% since August 2021
Cryptocurrency volumes witnessed a surge with new and existing investors ramping up trading activity ahead of Parliament's winter session, when the government is expected to move key legislation to regulate the industry.
Trading volumes in November increased by 50-150% month-on-month driven by a new wave of traders and existing ones that moved to diversify their holdings in the face of volatility. After a boom, the crypto market witnessed two small drops in the past four days in which bitcoin plunged by more than 17% from a peak of 68,521 reached on November 5.
While day traders hedged their positions with simultaneous buy and sell orders, former portfolio investors sold their holdings and new investors attracted by recent historic gains on the buying side of traders, Shivam Thakral, CEO of BuyUcoin told Economic Times. BuyUcoin saw its trading volume increase by more than 500% since August 2021.
Another major exchange, WazirX, saw its trading volumes increase 44% month-over-month on average every month since January of this year.
According to industry experts, those who are already sitting on huge profits sold a portion of their properties. Data from exchanges shows that small investors, with average investments in the range of Rs 2,000 to Rs 10,000, have risen in the last two weeks.
Shashi Jha, WazirX's head of legal and compliance, told ET that the exchange saw growth of 10 million users in November alone and subscriptions grew 10 times in 2021.
The increase in volumes comes at a time when the government is working overtime to regulate the industry that has so far been allowed to run uncontrollably. The government is expected to issue regulatory standards in early December, it is expected.
Regulation of cryptocurrency trading
Prime Minister Narendra Modi last week chaired a key meeting with senior officials on digital currencies and related issues. The meeting came after RBI Governor Shaktikanta Das sounded an alarm about the risks altcoins pose to the economy. The key issues raised during the meeting were misleading advertisements promising massive returns and risk from money laundering and terrorist financing activities.
According to the unofficial accounts, there are 15-20 million cryptocurrency traders in India who will be affected if the government takes action to ban digital currencies. However, reports citing senior officials say the government is likely to introduce legislation to regulate and tax crypto profits rather than a total ban.
