Crypto Tax Drives Indian CoinDCX's 12% Job Cut

Crypto Tax Drives Indian CoinDCX’s 12% Job Cut

Time Stamp: August 23, 2023 3:28 AM
Crypto Tax Drives Indian CoinDCX's 12% Job Cut PlatoBlockchain Data Intelligence. Vertical Search. Ai.

Difficult
macroeconomic conditions and a prolonged bear market in the cryptocurrency
industry have affected another digital asset exchange, which announced a
reduction in employment. Following similar moves by KuCoin, Luno, and Gemini,
the Indian exchange CoinDCX is parting with some of its employees. A post on
its official blog announced that about 12% of its staff would lose their jobs.

Most
cryptocurrency exchanges announcing workforce reductions usually attribute
their decision to high inflation, tough economic conditions, and a ‘crypto
winter’ (a prolonged period of low prices). CoinDCX founders, Sumit Gupta and
Neeraj Khandelwal, cited similar reasons, adding a third to the list.

This third
reason is the impact of the Tax Deducted at Source (TDS) regulations
implemented by the Indian government for collecting taxes at the source of
income. TDS is a method of tax collection where the payer of an amount deducts
a certain percentage as tax when making the payment.

Once
deducted, this amount is deposited with the government. Essentially, the tax is
collected at the source of income rather than at a later date. Crypto
transactions are subject to a 1% TDS from July 2022. CoinDCX claims this has
negatively affected the volumes and revenues of domestic cryptocurrency exchanges.

The
exchange optimized costs and invested in automation to adapt to changing
conditions. Additionally, it resolved to focus on a few select products and
initiatives as part of its long-term business strategy.

“To
further ensure we run as a healthier business moving forward, the current
situation demands that we operate with a more efficient team structure. To this
end, we have made the difficult decision to resize certain teams and direct the
business towards profitable and sustainable growth,” Gupta and Khandelwal
commented in an official blog post.

About 12%
of the laid-off staff will receive a support package consisting of a severance
equal to the full notice period plus one full month, settlement of unused
leave, and an extension of health insurance.

“For
those who continue to stay with us, we remain bullish on the India opportunity
and are committed to our mission of driving crypto and web3 adoption to 50
million people by 2025,” CoinDCX’s executives concluded.

No One is Spared from the
Cuts

Over the
past nine months, Finance Magnates has frequently reported on mass job
cuts in the cryptocurrency industry and the broader financial sector.

Last month,
rumors surfaced that KuCoin was preparing for massive layoffs of 30% of its
employees. However, the exchange distanced itself from this news and termed it
an ’employment evaluation’. At the same time, retail trading giant Robinhood
announced a significant reduction, marking the third time it had decided to
reduce its workforce. Since 2022, the company has parted ways with 1,150
employees.

The
Winklevoss twins-owned cryptocurrency exchange, Gemini, also cut its workforce
three times within a year. Like many other exchanges, the decision was
attributed to low cryptocurrency asset valuations and declining investor
activity.

Even though
Bitcoin (BTC) has rebounded by nearly 60% in 2023 and is currently priced at $26,000,
in 2022, it fell by almost 65%, dropping from $50,000 to just $16,000. For
cryptocurrency companies, this often meant a multiple-fold decrease in revenue,
making survival in this increasingly competitive sector much harder. For example, crypto miners made $6 billion less in 2022 than in record-breaking 2021.

Difficult
macroeconomic conditions and a prolonged bear market in the cryptocurrency
industry have affected another digital asset exchange, which announced a
reduction in employment. Following similar moves by KuCoin, Luno, and Gemini,
the Indian exchange CoinDCX is parting with some of its employees. A post on
its official blog announced that about 12% of its staff would lose their jobs.

Most
cryptocurrency exchanges announcing workforce reductions usually attribute
their decision to high inflation, tough economic conditions, and a ‘crypto
winter’ (a prolonged period of low prices). CoinDCX founders, Sumit Gupta and
Neeraj Khandelwal, cited similar reasons, adding a third to the list.

This third
reason is the impact of the Tax Deducted at Source (TDS) regulations
implemented by the Indian government for collecting taxes at the source of
income. TDS is a method of tax collection where the payer of an amount deducts
a certain percentage as tax when making the payment.

Once
deducted, this amount is deposited with the government. Essentially, the tax is
collected at the source of income rather than at a later date. Crypto
transactions are subject to a 1% TDS from July 2022. CoinDCX claims this has
negatively affected the volumes and revenues of domestic cryptocurrency exchanges.

The
exchange optimized costs and invested in automation to adapt to changing
conditions. Additionally, it resolved to focus on a few select products and
initiatives as part of its long-term business strategy.

“To
further ensure we run as a healthier business moving forward, the current
situation demands that we operate with a more efficient team structure. To this
end, we have made the difficult decision to resize certain teams and direct the
business towards profitable and sustainable growth,” Gupta and Khandelwal
commented in an official blog post.

About 12%
of the laid-off staff will receive a support package consisting of a severance
equal to the full notice period plus one full month, settlement of unused
leave, and an extension of health insurance.

“For
those who continue to stay with us, we remain bullish on the India opportunity
and are committed to our mission of driving crypto and web3 adoption to 50
million people by 2025,” CoinDCX’s executives concluded.

No One is Spared from the
Cuts

Over the
past nine months, Finance Magnates has frequently reported on mass job
cuts in the cryptocurrency industry and the broader financial sector.

Last month,
rumors surfaced that KuCoin was preparing for massive layoffs of 30% of its
employees. However, the exchange distanced itself from this news and termed it
an ’employment evaluation’. At the same time, retail trading giant Robinhood
announced a significant reduction, marking the third time it had decided to
reduce its workforce. Since 2022, the company has parted ways with 1,150
employees.

The
Winklevoss twins-owned cryptocurrency exchange, Gemini, also cut its workforce
three times within a year. Like many other exchanges, the decision was
attributed to low cryptocurrency asset valuations and declining investor
activity.

Even though
Bitcoin (BTC) has rebounded by nearly 60% in 2023 and is currently priced at $26,000,
in 2022, it fell by almost 65%, dropping from $50,000 to just $16,000. For
cryptocurrency companies, this often meant a multiple-fold decrease in revenue,
making survival in this increasingly competitive sector much harder. For example, crypto miners made $6 billion less in 2022 than in record-breaking 2021.

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