Cryptocurrency trading dives around 60%; banks reluctant to do business with exchanges

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Amid lack of support from banks, trading volume for major cryptocurrency exchanges has fallen sharply upto 60 % in June compared to the month of May. This has coincided with the correction in major cryptocurrencies, due to which traders are exercising caution, say experts. On June 22 Bitcoin sank as low as $29,334, a level that was last seen in January, 2021. It touched an all-time high of nearly $65,000 in May 2021.

“Trading volume has fallen by 60% compared to May because big transactions have got affected in the absence of support system from banks. Another reason for the low volume has been the decline in crypto prices. The trend has been seen across the exchanges, ” said Nischal Shetty, founder and chief executive officer of WazirX, India’s largest cryptocurrency exchange.

RBI’s stance

The Reserve Bank of India (RBI) issued a clarification on May 31st 2021, that banks have to adhere to last year’s Supreme Court cryptocurrency judgement, which lifted the ban on banking services for cryptocurrency trading in India. One month since the clarification not much has changed for crypto exchanges, as many banks still continue to maintain a distance from exchanges.

“We have seen a dip of more than 50% in month-on-month trading volume in the month of June, 2021. The drop in Bitcoin price is one of the major reasons for the decrease in volume. We have seen more people coming into the market when the prices are going up or in an uptrend. Now, we’re seeing a dip in bitcoin price and also in trading volume,” Avinash Shekhar, Co-CEO of ZebPay said.

Integration with payment gateways

Several exchanges have integrated with payment gateways for offering banking services. Payment gateways, however, have many issues as they have transactions limit, a higher failure rate and increased charges for depositing money. “Trade volumes have reduced by more than 50% along with the number of transactions. Now, customers are not incentivised to trade given increased costs as well as an inconvenience with some failed deposits. Previously, we were able to accord zero-fee deposits via bank accounts,” said Vikram Subburaj-Co-Founder and CEO Giottus Crytocurrency Exchange.

“This has coincided with the price drop among Bitcoin, Ethereum and major cryptocurrencies in the last month. Naturally, customers are exercising caution,” added Subburaj.

Though exchanges are optimistic about trend reversal in crypto prices soon, the lack of support from banks is a worrying factor for many.