Cryptocurrency platforms have started offering rewards and tax-friendly investment as well as trading options to users as trading volumes across exchanges have nosedived. Platforms are absorbing the applicable Tax Deducted at Source (TDS), offering cashbacks, introducing passive income schemes and exchange traded funds to maintain the influx of investors and traders.
This comes as cryptocurrency exchanges have seen the trading volumes nosedive post the tax implementation. The volumes are down nearly by 80 per cent across exchanges, according to crypto research firm Crebaco. WazirX, Bitbns and Zebpay have lost 75 per cent in trading volumes, respectively.
2% cash back
An early stage exchange weTrade is offering a 2 per cent cashback on every investment and offers an additional 1 per cent cashback on every sale to cover for TDS charges. Prashant Kumar, Founder and Chief Executive Officer of weTrade, told BusinessLine, “the challenges in the industry have pushed us to get innovative with our offerings to serve and reward our platform users.”
Kumar believes more platforms going forward will come up with innovative products in tandem with the changing market conditions. He said the platform has seen two times week on week growth since its inception in May.
Passive income scheme
Similarly, another prominent crypto exchange in India, CoinDCX, is offering ‘Earn’, a passive income scheme that claims to offer 13 per cent interest on an investor’s crypto holdings. The platform has told a daily that ‘Earn’ is a part of ‘TDS-friendly products’ that exchange plans to launch going forward and has seen great adoption since it was introduced on May 26.
Not just the pure play exchanges, Vested Finance, an investment platform that enables Indian investors to invest in the US stock market, has added cryptocurrency-backed securities to their offerings. Investing through this route comes under capital gains similar to investing in US equities and is not subject to the crypto tax in India.
Viram Shah, Co-Founder & CEO, Vested Finance, told BusinessLine, “we have seen a pickup in tax-efficient options to get exposure to crypto in recent months. We believe that as more education is built around these products, more Indian investors will consider alternative tax-efficient crypto investing options.”
One of their offerings, ProShares Bitcoin Strategy ETF which enables investors to get exposure to Bitcoin returns saw a 33 per cent increase in buying volumes in Q1 2022 as compared to Q4 2021 after the 30 per cent tax on crypto gains came into effect.