In order to deter crypto trading activities in the country, the Indian government has imposed hefty taxes on crypto profits over the last year and more. Local crypto exchange WazirX believes that this crypto tax regime is likely to continue for two more years.
Indian authorities introduced a 1% levy, referred to as TDS (Tax Deducted at Source), on cryptocurrency transactions last year. This move led to a significant decline in trading volumes on exchanges, as market makers and high-frequency investors scaled back their activities due to the increased costs.
One of WazirX’s primary rivals reported that this tax was a major factor in a 97% reduction in trading volumes on domestic exchanges over just 10 months. In an interview with Bloomberg, Nischal Shetty, chief executive officer of the WazirX exchange said:
“I don’t think we’ll see any immediate reduction in TDS since there have been no formal discussions between the industry and lawmakers specifically around it”.
Shetty expressed optimism that India will take certain measures to adopt a more crypto-friendly policy in the near future, although he did not provide specific details about the expected changes. Shetty has relocated to Dubai to spearhead his upcoming project, Shardeum, a blockchain platform with aspirations to compete with established networks like Ethereum and others
India’s Evolving Crypto Landscape
India has urged for a coordinated global approach to cryptocurrency regulations, seeking collaboration with organizations like the International Monetary Fund (IMF).
Despite all the strong taxation in India, the country’s crypto landscape has evolved at a greater speed. From July 2022 to June 2023, India led the charts in transaction volume, with an estimated $268.9 billion in crypto assets, marking a significant presence in the global cryptocurrency landscape. The nation also claimed the top spot on Chainalysis’ Global Crypto Adoption Index, showcasing robust grassroots adoption of cryptocurrency.
India alone contributes to 20% of the global crypto adoption and also ranks second in the usage of decentralized exchanges (DEXs).
At the same time, the Indian government is taking a greater interest in pushing the usage of its central bank digital currency (CBDC) aka Digital Rupee. India has also deployed a Dark Net monitor against crypto crime.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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