Some of the crypto platforms in India have restricted their users from using basic features like crypto deposits and withdrawals.
Most Indian exchanges are currently working on adopting TDS guidelines released by the I-T department and it may have impacted the users
The investigations by government agencies can also be a reason behind exchanges not allowing crypto withdrawals and deposits, an industry source said
The crypto industry in the country is trying to come to terms with the imposition of 1% TDS on crypto transactions, with exchanges notifying users about cancelling auto-set orders post-June 30, 2022. Amidst this, some of the leading crypto platforms in India have also restricted their users from using basic features like crypto deposits and withdrawals.
While CoinSwitch Kuber has disabled crypto deposits and withdrawals for many months, citing regulatory issues, CoinDCX disabled crypto withdrawals recently and is in the process to disable deposits also. On the other hand, Vauld that is currently offering crypto deposit and withdrawal features, do not offer INR-based transactions.
The Big Issue Of Crypto Withdrawal And Deposits
Before the launch of UPI 2.0, crypto users used to point out the limitations of UPI wallets, such as lack of interoperability and international payments. However, the time has changed now. A majority of Indian users are no longer able to transact in crypto as freely as earlier.
Many crypto users, therefore, took to social media platforms to vent out their anger on popular crypto platforms disabling basic features.
A CoinSwitch user Ranjeet Kumar tweeted, “Kindly enable crypto withdrawal & deposit…you have shut down this service since 12 months…what pathetic service you are providing to the user….I have taken wrong decision that I have used your exchange.”
Similarly, users have been tweeting about CoinDCX. “It’s very strange @CoinDCX @smtgpt not supporting crypto withdrawal neither they provide a strong reason for suspending withdrawals nor the estimated time frame. Be careful,” a user named Niraj tweeted.
Another leading crypto exchange WazirX too has been offering only peer-to-peer (P2P) transactions, while INR deposits and withdrawals have been paused on the platform.
Is Lack Of Regulatory Clarity Hurting Exchanges?
Responding to the complaints, CoinSwitch Kuber cited the lack of clarity from regulators and policymakers as the reason for disabling the features.
“Crypto deposits and withdrawals will be currently disabled until we get further clarity from our regulators and policymakers, however trading within the app is available. You can buy, sell, deposit through bank transfers, and also withdraw the amount,” the exchange said in a statement.
A founder of a crypto exchange, who didn’t want to be named, told Inc42, “While most of the exchanges’ operations are currently impacted due to their efforts towards enabling 1% TDS on crypto transactions, CoinSwitch Kuber’s issue seems to be different. They have not been operating like other Indian exchanges with due transparency where one could trace the entire flow of transactions.”
It is worth noting that the GST Mumbai Commissionerate has been investigating the business activities of India’s leading crypto exchanges — WazirX, CoinDCX, CoinSwitch Kuber, BuyUCoin and Unocoin.
The Enforcement Directorate is separately investigating WazirX and Binance with regards to ‘unaccounted’ crypto transactions.
A crypto analyst told Inc42 that the increased scrutiny could be the reason behind some of these exchanges suspending their deposits and withdrawals in crypto.
A user named Ravi Kumar said that CoinDCX, in an email, asked him about the source of funds in order to enable crypto withdrawals. “When I wanted to withdraw my full crypto they sent me this mail,” he said.
Meanwhile, CoinDCX informed its users that it has been strengthening its compliance and risk framework due to enhanced requirements for providing INR deposits & withdrawals. “Crypto deposits & withdrawals remain disabled for everyone by default. One must follow an enhanced due diligence process to enable crypto deposit/withdrawal. The policy on the same will be released in the next 14 days,” the company said in a statement.
Other Issues With Crypto Exchanges
The customers of the crypto exchanges are also grappling with a slew of other issues. CoinDCX users have been complaining about login and KYC issues. “Despite providing all the details, it continues to ask me for Aadhaar and PAN data,” a customer, Manoj Kumar, told Inc42. He complained of having similar issue with Zebpay too.
Besides, the wallets of some of the users have been under maintenance and as a result, they are unable to withdraw their assets. “Unable to withdraw my money from my coindcx account wallet for last 2 month, issue has been raised to support team. Still issue not yet resolved. why none of your technical team working or Coindcx holding investors money?” tweeted one user.
A CoinSwitch Kuber user alleged that the exchange was not letting him delete his account. “I requested to delete my account with Coinswitch kuber as I decided to quit trading and they said to mail and they keep on (making) weird excuses and began dodging my main concern. This all looks shady and i don’t want to have all my personal details(kyc, pan) with these guys, how to deal?” the user said on Reddit.
A crypto investor, Nikhil K, told Inc42, “The bad user experience with these crypto apps is ruining my overall crypto experience. What’s the use of buying crypto on these apps if you can’t link your Metamask wallet?”
Saying that there is already a significant delay in transactions and INR deposits take a long time to reflect, he said TDS imposition would further delay the transactions. He added that he might all together stop investing in cryptocurrency.
Bad User Experience Ruins Rankings Of Indian Crypto Apps
The inability of crypto exchanges to provide basic features of deposits and withdrawals is reflected in the Indian rankings of their apps. In the last two months, almost all Indian crypto apps in the free fintech app category have recorded a near free fall in their India rankings.
CoinDCX and CoinSwitch Kuber, which were ranked 27th and 19th, respectively, in the first week of April, are currently at 110th and 161th positions, respectively, according to an app analytics firm SensorTower.
WazirX’s ranking too has been on a constant decline, mostly due to its founders moving to other projects. Many of its users are moving to Binance and other crypto exchanges.
The TDS for crypto transactions, which will come into effect from July 1, 2022, is likely to further spoil user experience. For crypto-to-crypto transactions, the TDS will be 1%+1%, doubling its impact on the users. Further, a certain delay is expected in finalising the transactions.
“…this may not impact the people who have been skipping the legal checks and balances in crypto transactions so far, but (it will impact) us, who try to abide by the law,” said Nikhil K, who is also working on his own crypto project.
Only time will tell if crypto exchanges will be able to meet the demands of the users and handle the legal scrutiny. For now, the Indian crypto exchanges are struggling, and the users are bearing the brunt.
