Reactions have been pouring in from stakeholders in the crypto and digital assets industry in India following the approval of the country’s Finance Bill 2022 on Friday by Lok Sabha, the lower house of India’s bicameral parliament.
While some stakeholders were pessimistic of the section of the Bill mandating a capital gains tax of 30% on crypto transactions, others were optimistic that the law would relax with time.
Nirmala Sitharaman, India’s Finance Minister, during a budgetary speech delivered before the House in February had said the government would impose 30 percent taxation on the transfer of virtual assets from the financial year 2022-2023.
She also disclosed the government’s intention to lay a 1% tax deducted at source (TDS) on the purchase and sale of cryptocurrencies in the country. She added that any gifts made in digital currencies will also be taxed at the hands of the recipient.
The finance minister had also confirmed that crypto holders cannot offset their losses from cryptocurrencies with the capital gains tax, which is allowed for stock investors.
However, despite the industry’s call for the government to tone down the crypto taxation, the bill was passed into law, with Sitharaman insisting that the government was taxing crypto because people are profiting from it.
With the passage, the crypto taxes will come into effect on April 1, while the TDS will start on July 1.
Mixed Industry Reactions
Nischal Shetty, the Chief Executive Officer of WazirX, one of India’s biggest cryptocurrency exchanges, said the passage “is poised to do more harm than good,” adding that the law could shoot down patronage of Indian exchanges and a subsequent increase in capital outflow to foreign ones.
Sathvik Vishwanath, co-founder and CEO of Unocoin, was particularly concerned about the effect the law will have on crypto traders in the country.
“This will have some repercussions on traders, especially the 1% TDS assessment. This will not only affect traders but also tax collections. We hope that in the subsequent years the crypto industry gets treated like other investment-related industries,” he explained.
Abhay Aggarwal, CEO and founder of non-fungible token (NFT) marketplace, Colexion, said the law will hamper the overall growth of the sector by reducing countrywide adoption and credibility.
On the positive side, however, Coinstore, a Singapore-based crypto exchange
Exchange
An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading.
An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. Read this Term that recently started operations in India, believes that the crypto tax is a good move that “will open the doors for crypto regulation in one of the largest democracies in the world.”
“India is a tech powerhouse and it has the potential to lead the world in the crypto and blockchain revolution. Some may feel that the tax structure is on the heavy side but it may undergo adjustments to match global expectations as the crypto industry in India enters a more mature phase. We are hopeful that Indian regulators will reach a consensus with the crypto industry soon,” said Charles Tan, Head of Marketing at Coinstore.
Lennix Lai, Director of OKX, formerly known as OKEx, the Seychelles-based cryptocurrency exchange
Cryptocurrency Exchange
A cryptocurrency exchange is an online platform that supports the exchange of various currencies for a cryptocurrency or digital asset.Comparable to a generalized financial exchange, a crypto exchange’s core function is to permit and encourage the buying and selling of cryptos.This is accomplished by producing a stable trading environment suitable for traders nested through different locations around the world. Sometimes a crypto exchange may be referred to as a digital currency exchange (DCE) for short.How Does Trading Take Place on a Crypto Exchange?Cryptocurrency trading occurs over a centralized exchange, although these crypto exchanges should be used with caution given the implications that surround the custody of new assets. Similar to the banking industry, when a crypto exchange holds cryptocurrencies of users they accrue interest and are no longer classified as client money.These provide an accessible platform for not only companies, hedge funds, and retail traders for exchanging digital currencies.Additionally, crypto exchanges serve a critical role in producing stability within the cryptocurrency sector given how the sourcing and pricing of these assets are innately volatile. One could think of a crypto exchange as an intermediary who provides a service by connecting buyers and sellers from various markets under one roof. In exchange for facilitating trades and for services rendered, a digital currency exchange generally collects a fee of an outgoing transaction that averages between 0.20% to 0.25% or will request a deposit fee that has been known to be as high as 11% for credit card deposits. Crypto exchanges may also support the exchange of crypto tokens, such as the Binance Token, which is ranked as the 9th most valuable cryptocurrency in the world.
A cryptocurrency exchange is an online platform that supports the exchange of various currencies for a cryptocurrency or digital asset.Comparable to a generalized financial exchange, a crypto exchange’s core function is to permit and encourage the buying and selling of cryptos.This is accomplished by producing a stable trading environment suitable for traders nested through different locations around the world. Sometimes a crypto exchange may be referred to as a digital currency exchange (DCE) for short.How Does Trading Take Place on a Crypto Exchange?Cryptocurrency trading occurs over a centralized exchange, although these crypto exchanges should be used with caution given the implications that surround the custody of new assets. Similar to the banking industry, when a crypto exchange holds cryptocurrencies of users they accrue interest and are no longer classified as client money.These provide an accessible platform for not only companies, hedge funds, and retail traders for exchanging digital currencies.Additionally, crypto exchanges serve a critical role in producing stability within the cryptocurrency sector given how the sourcing and pricing of these assets are innately volatile. One could think of a crypto exchange as an intermediary who provides a service by connecting buyers and sellers from various markets under one roof. In exchange for facilitating trades and for services rendered, a digital currency exchange generally collects a fee of an outgoing transaction that averages between 0.20% to 0.25% or will request a deposit fee that has been known to be as high as 11% for credit card deposits. Crypto exchanges may also support the exchange of crypto tokens, such as the Binance Token, which is ranked as the 9th most valuable cryptocurrency in the world. Read this Term, also toed Tan’s line, noting that taxing an certain asset class indicates that those assets are recognized as a tradable asset class by country’s regulator.
“That gives the industry a lot more clarity on the legal status of crypto and its derived income. Hence it’s good news for the industry in India with respect to building a more regulated operating environment for crypto,” Lai added.
Distrust in Cryptocurrencies?
For some time now, the Indian government has been mulling over the possibility of launching its own central bank digital currency (CBDC). In a budgetary speech in February, Shitaraman had said the Reserve Bank of India (RBI) was going to introduce the CBDC in the country’s next financial year.
Meanwhile, the Indian government had initially made efforts to impose a complete ban on cryptocurrencies as a payment mode with a bill that recommended strict jail terms for violators who could be arrested without any warrant.
The Cryptocurrency and Regulation of Official Digital Currency Bill had also sought to ban all private cryptocurrencies in the country, although it wanted to allow for “certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
Tax evasion has also been a problem in the Indian cryptocurrency space. A raid on six Indian crypto exchanges earlier this year had uncovered $9.4M in unpaid taxes with WazirX alone evading $6 million in taxes.
Reactions have been pouring in from stakeholders in the crypto and digital assets industry in India following the approval of the country’s Finance Bill 2022 on Friday by Lok Sabha, the lower house of India’s bicameral parliament.
While some stakeholders were pessimistic of the section of the Bill mandating a capital gains tax of 30% on crypto transactions, others were optimistic that the law would relax with time.
Nirmala Sitharaman, India’s Finance Minister, during a budgetary speech delivered before the House in February had said the government would impose 30 percent taxation on the transfer of virtual assets from the financial year 2022-2023.
She also disclosed the government’s intention to lay a 1% tax deducted at source (TDS) on the purchase and sale of cryptocurrencies in the country. She added that any gifts made in digital currencies will also be taxed at the hands of the recipient.
The finance minister had also confirmed that crypto holders cannot offset their losses from cryptocurrencies with the capital gains tax, which is allowed for stock investors.
However, despite the industry’s call for the government to tone down the crypto taxation, the bill was passed into law, with Sitharaman insisting that the government was taxing crypto because people are profiting from it.
With the passage, the crypto taxes will come into effect on April 1, while the TDS will start on July 1.
Mixed Industry Reactions
Nischal Shetty, the Chief Executive Officer of WazirX, one of India’s biggest cryptocurrency exchanges, said the passage “is poised to do more harm than good,” adding that the law could shoot down patronage of Indian exchanges and a subsequent increase in capital outflow to foreign ones.
Sathvik Vishwanath, co-founder and CEO of Unocoin, was particularly concerned about the effect the law will have on crypto traders in the country.
“This will have some repercussions on traders, especially the 1% TDS assessment. This will not only affect traders but also tax collections. We hope that in the subsequent years the crypto industry gets treated like other investment-related industries,” he explained.
Abhay Aggarwal, CEO and founder of non-fungible token (NFT) marketplace, Colexion, said the law will hamper the overall growth of the sector by reducing countrywide adoption and credibility.
On the positive side, however, Coinstore, a Singapore-based crypto exchange
Exchange
An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading.
An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. Read this Term that recently started operations in India, believes that the crypto tax is a good move that “will open the doors for crypto regulation in one of the largest democracies in the world.”
“India is a tech powerhouse and it has the potential to lead the world in the crypto and blockchain revolution. Some may feel that the tax structure is on the heavy side but it may undergo adjustments to match global expectations as the crypto industry in India enters a more mature phase. We are hopeful that Indian regulators will reach a consensus with the crypto industry soon,” said Charles Tan, Head of Marketing at Coinstore.
Lennix Lai, Director of OKX, formerly known as OKEx, the Seychelles-based cryptocurrency exchange
Cryptocurrency Exchange
A cryptocurrency exchange is an online platform that supports the exchange of various currencies for a cryptocurrency or digital asset.Comparable to a generalized financial exchange, a crypto exchange’s core function is to permit and encourage the buying and selling of cryptos.This is accomplished by producing a stable trading environment suitable for traders nested through different locations around the world. Sometimes a crypto exchange may be referred to as a digital currency exchange (DCE) for short.How Does Trading Take Place on a Crypto Exchange?Cryptocurrency trading occurs over a centralized exchange, although these crypto exchanges should be used with caution given the implications that surround the custody of new assets. Similar to the banking industry, when a crypto exchange holds cryptocurrencies of users they accrue interest and are no longer classified as client money.These provide an accessible platform for not only companies, hedge funds, and retail traders for exchanging digital currencies.Additionally, crypto exchanges serve a critical role in producing stability within the cryptocurrency sector given how the sourcing and pricing of these assets are innately volatile. One could think of a crypto exchange as an intermediary who provides a service by connecting buyers and sellers from various markets under one roof. In exchange for facilitating trades and for services rendered, a digital currency exchange generally collects a fee of an outgoing transaction that averages between 0.20% to 0.25% or will request a deposit fee that has been known to be as high as 11% for credit card deposits. Crypto exchanges may also support the exchange of crypto tokens, such as the Binance Token, which is ranked as the 9th most valuable cryptocurrency in the world.
A cryptocurrency exchange is an online platform that supports the exchange of various currencies for a cryptocurrency or digital asset.Comparable to a generalized financial exchange, a crypto exchange’s core function is to permit and encourage the buying and selling of cryptos.This is accomplished by producing a stable trading environment suitable for traders nested through different locations around the world. Sometimes a crypto exchange may be referred to as a digital currency exchange (DCE) for short.How Does Trading Take Place on a Crypto Exchange?Cryptocurrency trading occurs over a centralized exchange, although these crypto exchanges should be used with caution given the implications that surround the custody of new assets. Similar to the banking industry, when a crypto exchange holds cryptocurrencies of users they accrue interest and are no longer classified as client money.These provide an accessible platform for not only companies, hedge funds, and retail traders for exchanging digital currencies.Additionally, crypto exchanges serve a critical role in producing stability within the cryptocurrency sector given how the sourcing and pricing of these assets are innately volatile. One could think of a crypto exchange as an intermediary who provides a service by connecting buyers and sellers from various markets under one roof. In exchange for facilitating trades and for services rendered, a digital currency exchange generally collects a fee of an outgoing transaction that averages between 0.20% to 0.25% or will request a deposit fee that has been known to be as high as 11% for credit card deposits. Crypto exchanges may also support the exchange of crypto tokens, such as the Binance Token, which is ranked as the 9th most valuable cryptocurrency in the world. Read this Term, also toed Tan’s line, noting that taxing an certain asset class indicates that those assets are recognized as a tradable asset class by country’s regulator.
“That gives the industry a lot more clarity on the legal status of crypto and its derived income. Hence it’s good news for the industry in India with respect to building a more regulated operating environment for crypto,” Lai added.
Distrust in Cryptocurrencies?
For some time now, the Indian government has been mulling over the possibility of launching its own central bank digital currency (CBDC). In a budgetary speech in February, Shitaraman had said the Reserve Bank of India (RBI) was going to introduce the CBDC in the country’s next financial year.
Meanwhile, the Indian government had initially made efforts to impose a complete ban on cryptocurrencies as a payment mode with a bill that recommended strict jail terms for violators who could be arrested without any warrant.
The Cryptocurrency and Regulation of Official Digital Currency Bill had also sought to ban all private cryptocurrencies in the country, although it wanted to allow for “certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
Tax evasion has also been a problem in the Indian cryptocurrency space. A raid on six Indian crypto exchanges earlier this year had uncovered $9.4M in unpaid taxes with WazirX alone evading $6 million in taxes.
