Indian Government Expected to Maintain Crypto Tax Regime for Two More Years, Says WazirX
The Indian government has imposed high taxes on cryptocurrency profits in an attempt to discourage crypto trading activities in the country. WazirX, a local crypto exchange, believes that this tax regime will continue for another two years. Last year, Indian authorities introduced a 1% levy called TDS (Tax Deducted at Source) on cryptocurrency transactions. This led to a significant decrease in trading volumes as market makers and high-frequency investors scaled back due to increased costs.
According to one of WazirX’s competitors, this tax was a major factor in a 97% reduction in trading volumes on domestic exchanges within 10 months. Nischal Shetty, the CEO of WazirX, expressed optimism that India would adopt a more crypto-friendly policy in the future but did not provide specific details. Shetty has relocated to Dubai to lead his upcoming blockchain project, Shardeum.
India’s Evolving Crypto Landscape
India has called for a coordinated global approach to cryptocurrency regulations and is seeking collaboration with organizations like the International Monetary Fund (IMF). Despite the heavy taxation, India’s crypto landscape has evolved rapidly. From July 2022 to June 2023, India led the charts in transaction volume, with approximately $268.9 billion in crypto assets. The country also ranked first on Chainalysis’ Global Crypto Adoption Index and contributes to 20% of global crypto adoption.
In addition, India ranks second in the usage of decentralized exchanges (DEXs) and has shown interest in promoting its central bank digital currency (CBDC), known as Digital Rupee. The Indian government has also deployed a Dark Net monitor to combat crypto-related crimes.
Hot Take: India’s Tax Regime Hinders Crypto Growth, but Adoption Continues
The heavy taxes imposed by the Indian government have significantly impacted crypto trading volumes and hindered the growth of the industry. However, despite these challenges, India has emerged as a leader in global crypto adoption and transaction volume. The country’s evolving crypto landscape showcases strong grassroots adoption and usage of decentralized exchanges.
While there is optimism for a more crypto-friendly policy in the future, it remains uncertain when changes will be implemented. In the meantime, India’s interest in its own central bank digital currency and efforts to combat crypto crime demonstrate a complex relationship between the government and the crypto industry.
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