The worldwide crypto market has been battered with billions of dollars wiped out but India has remained relatively calm thanks to the cautious approach of the government and RBI. While the Reserve Bank of India (RBI) has refused to recognize cryptocurrencies and has repeatedly warned against trading them, the government has fired the tax bullet to stem demand.
Net result
Indian investors have largely been exited electronic money The crisis brought the total market value of cryptocurrencies to less than $1 trillion (about 81,23,700 crore) in just one year from $3 trillion (about 2,43,68,445 crore) in 2021 and send crypto exchange based in the Bahamas FTX went bankrupt after customers withdrew their money.
The collapse of the FTX empire, which wiped out the entire $16 billion (about 1,29,965 crore) fortune of co-founder Sam Bankman-Fried – one of the largest asset destructions in history, has shakes the faith of those already in trouble. The industry is struggling to gain mainstream credibility. Prices of top cryptocurrencies, Bitcoin and Etherhas decreased sharply.
In India, RBI was firmly opposed to cryptocurrencies from day one while the government was initially toying with the idea of regulating such tools by introducing a law.
However, the government after much deliberation has come to the conclusion that there is a need for a global consensus for virtual currencies because they are borderless and the risks involved are too high.
According to the RBI, cryptocurrencies have been specifically developed to bypass the regulated financial system, and this is reason enough to treat them with caution.
Industry estimates put Indian investors’ exposure to crypto assets at just 3%.
Despite the global crisis, India-focused crypto companies have yet to sound the alarm. India’s Largest Cryptocurrency Exchange WazirX and ZebPay continue to operate.
“Who is the hero?
Government of India, SEBI and RBI. If Indian institutions like brokers get into crypto, imagine how many people will lose money. Even without this, around 3% of Indians own crypto.
“Tailpiece: This may not be over. Please don’t buy this embed,” tweeted Abid Hassan, CEO of Sensibull.com, India’s largest options platform.
According to the president of the National Association of Exchange Members of India (ANMI), Kamlesh Shah, the steps taken by the RBI and the government to de-recognize cryptocurrencies are appropriate at this time.
India has not yet seen its savings converted into investments in a meaningful way for economic growth, Mr. Shah said.
Describing Cryptocurrencies as “Clear Danger”, Reserve Bank Governor Shaktikanta Das in the Financial Stability Report released in June said that anything that derives value based on trust, without any basis, is mere speculation under a convoluted name.
The RBI has warned the public about such virtual currencies, and the government also supports the idea of banning private digital currencies.
Finance Minister Nirmala Sitharaman reiterated the RBI’s stance on banning cryptocurrencies but said that no law is possible without significant international cooperation.
Sitharaman in a recent text to Congress said that the RBI is of the opinion that cryptocurrencies should be banned.
By definition, cryptocurrencies are borderless, and international cooperation is needed to prevent regulatory arbitrage, she said.
“Therefore, any regulatory or prohibitive legislation can only come into force after significant international cooperation on risk and benefit assessment and the development of classifications and standards,” she said. common standard.
Sitharaman has had numerous multilateral forums calling for an effective tax reporting regime and inter-jurisdiction exchange of information for crypto assets to combat tax evasion abroad.
When India takes over the G-20 presidency from December 1st, crypto regulation and the need for a concerted effort between countries will be among the priority areas for discussion among the leaders. global leadership.
Generate similar views
U.S. Treasury Secretary Janet Yellen on Friday said she emphasized the need for high regulatory standards globally to deal with the risks of cryptocurrencies.
“We need a high standard of regulation globally, we need to take steps to reduce the cost of cross-border payments, and we are very actively working on financial stability with the Special Forces. Responsible for Financial Action and multilateral banks like the IMF to really deal globally based on the risks and some benefits from cryptocurrencies,” Yellen said.
International cooperation is really important between public authorities, the private sector and other stakeholders, she said.
Although the legality of cryptocurrencies has yet to be decided, the government, from April 1st, introduced a 30% income tax plus surcharge and tax on the transfer of crypto assets, such as Bitcoin, Ethereum, Tether and Dogecoin.
Also, to keep a tab on money, 1 percent TDS has been brought in for payouts over Rs 10,000 on virtual digital currencies.
Even now cryptocurrency profits are subject to income tax, but the Budget 2022-23 announcement of a 30 percent tax clarifies how much tax must be paid.
Industry experts say high taxes and increased compliance requirements as a result of TDS have dampened investor mood, and crypto exchanges have seen a drop in trading volumes.
Officials in the Treasury Department argue that the taxation does not make cryptocurrencies a legal tender. “If you are making money from virtual digital assets, you have to pay taxes. The question of legality is still undecided,” an official said.
In addition, tax authorities have also stepped up their investigation and crackdown on major crypto service providers for alleged Goods and Services Tax (GST) evasion.
RBI warned users, holders and traders of Virtual Currency (VC) through public announcements on December 24, 2013, February 1, 2017 and December 5, 2017 that VC trading There are economic, financial, operational, legal, potential protection and security-related risks involved.
RBI also issued a circular on April 6, 2018, prohibiting its regulated institutions from trading in virtual currency (VC) or providing services to facilitate any individual. or any organization in the transaction or settlement of VCs.
