India’s crypto sector is pinning its hopes on Finance Minister Nirmala Sitharaman for a crypto-friendly Union Budget this year. After what has been a bloodbath in global crypto, homegrown exchanges and trading platforms expect some positive reinforcement from the government. “While last year’s Union Budget was about recognising cryptos, this year should be about refinement,” Ashish Singhal, Co-founder and CEO, CoinSwitch, told Business Today.
CoinSwitch is one of India’s largest crypto exchanges with 19 million users. Given the regulatory uncertainty around crypto as an asset class, the Bengaluru-headquartered unicorn recently forayed into wealth tech, with an aim to assist retail investors in their entire financial journey.
On its crypto trading platform, meanwhile, CoinSwitch has seen investor sentiment taking a hit after the introduction of the 30 per cent crypto gains tax in Budget 2022-23. Overall, crypto trading volumes in India fell as much as 90 per cent post that taxation. “Implementing a 30 per cent tax, 1 per cent TD, and no provision to offset losses have decreased trading volumes. It is making the markets illiquid, and investor sentiment is running low. Such circumstances push consumers’ money offshore into the grey markets, exposing them to regulatory issues,” Singhal explained.
CoinSwitch reckons that the Government should “incentivise users” to stay within national jurisdiction by reducing the burden of taxes. “If the TDS aims to establish a trail of crypto transactions, it can be achieved by a lower rate of 0.1 per cent. Similar to listed securities, existing provisions of capital assets should be made applicable for Virtual Digital Assets (VDAs),” Singhal shared.
Additionally, if India were to become a competitive player in the global crypto and Web3 ecosystem, “tax authorities should allow carrying forward and setting off losses incurred from the sale of VDAs, similar to how it is done for capital gains,” he added.
CoinSwitch believes such a move would not only increase customer adoption of crypto in India, but would also generate healthy revenue pipelines for the government, and enable the country to take the lead in the upcoming technology revolution.
Much like other crypto bosses in India, Singhal too called for a definitive regulatory framework for the sector. “We support the government’s intention to trace and tax cryptos. [But] the absence of comprehensive regulations, which are at the intersection of user protection, supports legitimate Indian start-ups, and serves the requirements of the regulators, makes the mechanism counter-productive,” he stated.
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today