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Global investing platform offers tax-friendly indirect exposure to cryptos; here's how

Global investing platform offers tax-friendly indirect exposure to cryptos; here's how

Through this platform, investors will be taxed under RBI’s LRS instead of the direct route wherein 30 per cent tax is levied on crypto gains along with 1 per cent TDS.

Global investing platform offers tax-friendly indirect exposure to cryptos; here's how Global investing platform offers tax-friendly indirect exposure to cryptos; here's how

Vested Finance, which is one of the leading platforms for global investing for Indian investors, has launched an indirect investment option for cryptocurrencies through which Indians can get exposure to Bitcoin, Ethereum, and other crypto assets without having to directly buy any cryptocurrency. 

The platform has added cryptocurrency-backed securities offered by Grayscale Investments as part of its premium offerings.  

Grayscale is the world’s largest digital currency asset manager with assets under management totalling over $25 billion. Grayscale securities are traded in the over-the-counter (OTC) markets and, through Vested, Indian investors can invest in Grayscale securities including, Grayscale Bitcoin Trust, Grayscale Ethereum Trust, Grayscale Litecoin Trust, Grayscale Ethereum Classic Trust and Grayscale Bitcoin Cash Trust. 

More importantly for Indian investors, investments in cryptos through this route will be taxed under the Reserve Bank of India’s Liberalised Remittance Scheme (LRS) and not the direct route wherein a 30 per cent tax is levied on crypto gains along with a one per cent TDS. 

In other words, short-term capital gains (if an investment is held for less than 36 months) will be taxed according to an individual’s tax slab while long-term capital gains (if the investment is held for over 36 months) will be taxed at 20 per cent with indexation benefits. 

Meanwhile, investors will also have the option to invest in Grayscale Digital Large Cap Fund if they want to invest in a basket of large-cap digital assets through a single fund. About 90 per cent of the fund is currently invested in Bitcoin and Ethereum though it also has exposure to Litecoin, Solana, Cardano, Avalanche and other coins. 

“The taxes on crypto assets have made the investment in crypto less appealing for Indian investors. Through Grayscale, investors can get exposure to crypto by investing in a stock and at the same time not be subjected to high taxation,” said Viram Shah, co-founder & CEO, Vested Finance. 

“Also, they need not worry about the safety of their crypto holdings. This gives investors more choice, as they will now have an alternative way to add crypto exposure to their portfolio,” he added.

Ever since the crypto tax was introduced in the Union Budget earlier this year, industry players have been saying that the tax component would be looked as a major deterrent by investors especially at a time when cryptocurrencies as such are not officially recognised by the government.

Recently, Nischal Shetty and Siddharth Menon, founders of cryptocurrency exchange WazirX, were in the news after they shifted base to Dubai, setting off speculations about other crypto start-ups moving to Dubai due to India's stance on cryptocurrencies.

Interestingly, as regional economic competition intensifies, Dubai has pushed for the growth of the crypto sector by establishing a regulatory environment conducive to the recruitment of crypto enterprises and personnel. 

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