1. Cryptocurrency exchanges see a steep decline in trading volume with the 1% TDS (tax deduction at source) rule coming into effect on July 1.
Under Section 194S of the Income Tax Act, 1% TDS will be levied on trades of virtual digital assets such as NFTs and cryptocurrencies over INR10,000 a year. As a result, on July 3, transactions dropped by 82% on the crypto-exchange platform WazirX, 70% on CoinDCX, and 76% on ZebPay. The TDS rule comes after a 30% tax was imposed on April 1 on profits from trading in digital assets.
Our Opinion: On the one hand, the TDS is a massive burden on India’s crypto exchanges when the crypto market is reeling from a crash and bracing for a bear phase. On the other hand, a tax on digital assets means fewer chances of an overnight ban on crypto transactions.
2. Vauld, a Singapore-based cryptocurrency exchange, has suspended trading, withdrawal, and deposits on the platform amid a volatile market environment.
Darshan Bathija, CEO, on Monday said the company was facing financial difficulties following customer withdrawals of USD197.7 million since June 12 on account of crypto crash and economic downturn. The company is now in talks with potential investors even as it is exploring restructuring and working with law firms to resolve the issue. The latest move comes just two weeks after the company, backed by Coinbase Venture and Peter Thiel, announced that it will lay off 30% of its workforce amid the downturn.
Our Opinion: User funds, millions of them probably, are locked in. Many users have expressed concerns over their investments in Vauld, and if they would ever get their money back. It is a cautionary tale not just for the users, but also for companies operating in this space.
3. Finance minister tells public banks to join account aggregator ecosystem by July 31
Union Finance Minister Nirmala Sitharaman directed the heads of all public sector banks to become part of the account aggregator ecosystem by the end of the month. The account aggregator ecosystem aims to transform how credit is processed and accessed in the country.
Our Opinion: This is an important step to increase financial inclusion and serve the credit needs of the country.
4. Ola looking to downsize again
Ola is working on a plan to bring down its human-resource cost. Responding to lay-off reports, the company is looking at “leaner and consolidated teams”. This development comes right after shutting down its quick-delivery and used-cars businesses under Ola Dash and Ola Cars, respectively, within months of their glitzy launch.
Our Opinion: Ola has been steadily downsizing its workforce over the years. That may help navigate its flagship mobility unit to profitability.