Crypto crash impact: Indian exchanges work on cutting costs, gear up for harsh winter
After a year of aggressive marketing, and high cash burn, Indian crypto platforms are now back to basics of focusing on products and looking at growing avenues of revenue generation, as they grapple with declining trading volumes, which is set to fall further as the 1 percent tax deducted at source (TDS) regime kicks in next month.
On Saturday, Bitcoin's price dropped upto $18,000 while Ethereum dropped below $1,000. Further, a 90 percent drop in volumes since March has raised questions about survival, especially for smaller players. But, Indian crypto players are not jumping the gun when it comes to making any business decisions. The market crash has given them an opportunity to rethink spends and hold on tight as the crypto winter looks to be far from over.
Meanwhile, international exchanges are feeling the pinch with volumes dropping amid falling prices of tokens, led by Bitcoin and Ethereum. Coinbase, the third-largest crypto exchange, has laid off 18 percent of its workforce. Many other exchanges have had to resort to the same move. But, Binance and Kraken have said that they will continue to hire more people despite the slowdown.
In India, while there may not be layoffs immediately, companies are likely to cut down on branding spends and cash burn. Over the past year, the acquisition spend per customer for many exchanges was in the range of Rs 500 to over Rs 1,000. While overall advertising has slowed down owing to the crash, per customer costs have not come down drastically yet.
“Currently, the best approach is to be conservative. There will be lesser spends on branding and more on performance-driven activities going forward,” said a fintech-crypto executive.
Sathvik Vishwanath, founder and CEO of crypto exchange
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