Difficult macroeconomic conditions and a prolonged bear market in the cryptocurrency industry have affected another digital asset exchange, which announced a reduction in staff. 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 team would lose their jobs.
CoinDCX Cites Three Reasons for the Job Cuts
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). The Founders of CoinDCX, 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 TDS of 1% from July 2022. CoinDCX claims this has negatively affected the volumes and revenues of domestic cryptocurrency exchanges.
The exchange has optimized its costs and invested in automation to adapt to changing conditions. Additionally, it has 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, 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 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.
