India’s crypto exchange CoinDCX, backed by Pantera and Steadview, on Tuesday said it let go of 12% of its workforce, citing an impact of high crypto taxes on its volumes and, therefore, revenue.
“Startups and businesses globally are going through challenging times due to tough macro conditions, more so in crypto because of the prolonged bear market and impact of TDS on domestic exchanges. These factors had a significant impact on our volumes and thus revenues,” the company’s co-founders Sumit Gupta & Neeraj Khandelwal said in a statement.
The layoffs at CoinDCX come a year after the firm topped $2 billion in valuation after raising over $135 million in a Series D funding round led by Pantera and Steadview, making it the most valued crypto company in India at the time, surpassing CoinSwitch Kuber.
However, after the Indian government levied a 30% flat income tax on cryptocurrencies in July 2022, things are looking grim in the Indian crypto sector. Indians shifted over $3.8 billion in trading volumes from local to foreign crypto exchanges last year.
The high tax regime has also kept investors at bay.
From a peak of $267 million in the fourth quarter of 2021, crypto funding plunged to a low of $32,500 in the first quarter of 2023. Funding in the first quarter of 2022 was $140 million, but after the tax levy, it dropped to $13 million in the subsequent quarter, according to data from Tracxn.
Many storied investors have stayed out of the sector as well. Tiger Global made an investment in CoinSwitch in 2021, whereas Sequoia funded MoHash in 2021. The two investment firms have not made any investments in the Indian cryptocurrency sector since then.
In major collapses in the sector, cryptocurrency investment startup Pillow, which counts Accel, Elevation Partners, and Quona Capital among its backers, shut shop last month due to regulatory uncertainty, barely months after Indian decentralised finance startup Flint, which is backed by Sequoia Capital and Coinbase, called it quits due to the same reasons.
“To adapt, we undertook several proactive measures, including direct cost optimisation and investment in automation to drive efficiency and productivity. We also reprioritised certain initiatives/products in line with our long-term business strategy,” CoinDCX said.
CoinDCX, India’s first cryptocurrency unicorn, said no further layoffs are planned.