India behind Vietnam, Turkey in estimated crypto gains in 2021: Chainalysis

India behind Vietnam, Turkey in estimated crypto gains in 2021: Chainalysis
Synopsis

United States topped the charts with an estimated realized gain of $49.95 billion, followed by the United Kingdom (UK) with estimated realized gains of $8.16 billion. The US topped the UK by about a wide margin of 575 per cent.

NEW DELHI: 2021 was a milestone year for cryptocurrencies, wherein virtual digital assets such as Bitcoin, Ethereum and many more bluechip crypto tokens scaled new life highs.

Thanks to this rally, investors around the world realized total gains of $162.7 billion in 2021, compared to just $32.5 billion in 2020, shows data released by crypto analytics firm Chainalysis.

But investors from which countries have added the most wealth? Answering the questions surrounding the theme, Chainalysis has released data for the second year in a row. This year, it has moved beyond Bitcoin and added more crypto tokens in its report.

Geographical analysis in cryptocurrency is difficult due to the technology’s decentralized nature. Chainalysis has attempted to estimate this through a combination of transaction data and web traffic data.

In its Global Crypto Adoption Index, derived through its methodology, the Chainalysis has included as many as 50 countries.

United States topped the charts with an estimated realized gain of $49.95 billion, followed by the United Kingdom (UK) with estimated realized gains of $8.16 billion. The US topped the UK by about a wide margin of 575 per cent.

Germany ($5.82 billion), Japan ($5.51 billion) and China ($5.06 billion) were other names in the top 5 countries in estimated realized gains, the data suggested.

Jennifer Lu, Cofounder at Coinstore said the exponential increase in crypto profits in 2021 underlines the fact that crypto as an investment class has performed better than the traditional asset class. “We strongly believe that a homogenous global regulatory framework for cryptos is the need of the hour as it will fast-track the adoption of crypto-related products and services,” she added.

Chainalysis analyzed that many emerging market countries have embraced cryptocurrency for remittances and as a response to currency devaluation.

In 2021, China’s total estimated realized cryptocurrency gains were $5.1 billion, up from $1.7 billion in 2020, for a year-over-year growth rate of 194 per cent. China’s lower growth rate most likely reflects a decline in the country’s cryptocurrency activity following government crackdowns.

India did not even make it to the top 20 names. It stood at 21st position with an estimated realized gain of $1.85 billion, lagging behind Asian peers such as Turkey, South Korea and even Vietnam.

Shivam Thakral, CEO of BuyUcoin, said, “It’s a great encouragement for crypto community across the globe to see that crypto investors have made handsome profits by putting their faith in crypto assets.”

India with crypto gains of around $1.8 billion is impressive despite the regulatory fluctuations, he added. India has the potential to be numero uno in the crypto gains if the industry is nurtured by a healthy regulatory framework, according to Thakral.

Anndy Lian, Chairman, BigONE Exchange said Vietnam’s cryptocurrency investment performance is the one that surprises me most.
Turkey ranked 11th in GDP at $2.7 trillion but sixth in realized cryptocurrency gains at $4.6 billion, whereas Vietnam ranks 25th in GDP at $1.1 trillion but 16th in realized cryptocurrency gains at $2.7 billion.

War hit Ukraine ranks 40th in GDP at $576 billion but 13th in realized cryptocurrency gains at $2.8 billion, whereas the Czech Republic ranks 47th in GDP at $460 billion but 19th in realized cryptocurrency gains at $1.9 billion.

Ethereum, meanwhile, was the most noteworthy gainer among the crypto assets, the study suggested. Ethereum edged out Bitcoin in total realized gains globally at $76.3 billion.

Chainalysis believes this reflects increased demand for Ethereum as the result of DeFi’s rise in 2021, as most DeFi protocols are built on the Ethereum blockchain and use it as their primary currency.

While most individual countries follow this pattern, there are some notable exceptions, it said in the blog.

Japan received a much higher share of realized gains from Bitcoin at just under $4.0 billion, compared to just $790 million in realized Ethereum gains.

“Ethereum being one of the most popular coins in the world just edged out Bitcoin in total gains. This is a close call in my opinion. Based on on-chain analysis, the overall gains should be fairly equal,” said Lian from BigOne.

“2021 that is mostly led by the Defi trend could be the main catalyst for Ethereum,” he added. “For 2022, we may be seeing Solana, Avalanche and Cronos rising up the ranks.”

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Fortune: Crypto trading in India plummets as much as 70% as new hurdles scare off investors

Fortune: Crypto trading in India plummets as much as 70% as new hurdles scare off investors

The cryptocurrency boom in India, which has the world’s second-largest community of crypto investors, may be turning into a bust.

“In general, we have seen trading volumes [on Indian exchanges] come down by 30%-40% in the last two to three weeks,” Nischal Shetty, founder and CEO of WazirX, India’s biggest cryptocurrency trading exchange told Fortune.

Other Indian crypto exchanges say their trading volumes have been hit too.

Sumit Gupta, co-founder and CEO at CoinDCX, blames the 30-35% drop in trading volume on his exchange, one of India’s largest, on global and domestic factors. Bitcoin has been stagnant at $39,000 to $40,000 for several months, while large traders have slowed their activity due to new taxes, he says.

Atulya Bhatt, co-founder of BuyUcoin, an Indian cryptocurrency exchange, says trading volume on his platform has fallen up to 70% “since the new taxation came in this month.”

Drops in trading volume vary from exchange to exchange, but volumes on most crypto platforms have dipped 30%-40% in April from the prior month, says Raj Kapoor, founder of India Blockchain Alliance, a trade body for the crypto industry.

“It is just the beginning. Volumes will drop substantially if there is no [government] intervention,” says Kapoor. “It is not going to be healthy for a nation like ours. When you have an elephant in the room [like crypto], you have to learn how to dance with it or get trampled.”

The double whammy of new taxes and limited payment mechanisms has soured crypto investors’ sentiment in the South Asian country, home to 25 million investors who hold assets worth more than $6 billion—putting the future of crypto in India in doubt.

India’s new budget, which took effect when the new fiscal year started on April 1, imposed a 30% capital gains tax on cryptocurrency earnings, the same rate the government applies to winnings from horse racing and a significant increase from the previous scheme that didn’t specify taxes for crypto but applied income-based rates that maxed out at 30%. Under the new tax rules, cryptocurrencies are subject to a heavier tax than traditional asset classes like stocks, which are taxed at varying rates starting at 10%. The 30% tax rate on cryptocurrency gains applies even to earners whose total annual income is below INR 250,000 or $3,300 and are otherwise exempt from paying income tax.

“That is causing a lot of fear and stress in the younger population who are into crypto trading,” says Shetty.

In addition to the 30% tax on earnings, the finance ministry is levying a 1% tax on every crypto transaction starting in July in an effort to rein in speculative trading.

“Historical data indicates that transaction taxes significantly reduce trading volumes,” says. Kristin Boggiano, president of crypto exchange Cross Tower.

Italy, for example, introduced a 0.1% tax on equity transactions in 2012 that caused a 35% decline in trading volumes over a two-year period, Boggiano says.

A recent decision by Indian banks to stop funneling rupees to crypto exchanges via state-run Unified Payments Interface (UPI) is also hitting trading volume.

Typically, investors could transfer money from their banks to a crypto exchange wallet over UPI, India’s ubiquitous payments processor that’s responsible for 75% of all crypto transactions in India, according to Shetty’s estimates. Once the transfer hits a wallet, investors can use the money to trade cryptocurrencies, such as Bitcoin. But earlier this month, banks severed that financial plumbing, says Shetty.

The trouble started after Nasdaq-listed crypto exchange Coinbase, which launched rupee-based operations in India earlier this month, publicly said that its users could easily deposit funds to their accounts on the exchange using UPI, throwing the behind-the-scenes payments system into a glaring spotlight. In response to the ad, the state-run National Payments Corporation of India (NPCI), which runs UPI, said it was not aware that the payment platform was being used to buy cryptocurrencies.

The statement by the Payments Corporation caused banks to second-guess the legality of routing payments to crypto exchanges. Banks have operated in a state of semi-limbo regarding crypto transactions for years after the country’s Supreme Court in 2020 overturned an order by the Reserve Bank of India for financial institutions to cut all ties with individuals and businesses dealing in cryptocurrency. The Supreme Court said the order violated the freedom of trade guaranteed by India’s Constitution, freeing up banks to facilitate crypto transactions until the latest NPCI statement delivered another dose of ambiguity.

Without access to UPI, crypto investors are finding it tough to deposit money from bank accounts to their wallets on crypto exchanges.

“We are on a wait and watch mode,” BuyUcoin’s Bhatt. “We are hoping that this is a temporary situation.”

India’s crypto enthusiasts had been hoping that the sector’s era of uncertainty was coming to a close.

Last year, Reserve Bank of India governor Shaktikanta Das said he had “serious concerns” about the potential risks of cryptocurrencies, and the government had proposed prohibiting certain private cryptocurrencies. However, the imposition of taxes on crypto earnings had signaled the government’s intent to regulate digital assets, rather than ban them outright.

But the new tax burden and UPI saga have cast the market back into the unknown, and industry executives say scores of startups in blockchain and crypto are exploring bases outside of India as a result.

“What we are seeing is a flight of funds to outside the country. A lot of people are opening payment wallets outside of India,” Kapoor says. High volume traders and firms are opting for locations like Dubai because it’s easier for crypto businesses to operate there, says Kapoor.

This week, India’s Business Today reported that WazirX founders Shetty and Siddharth Menon had shifted their base of operations from India to Dubai. In an interview with Fortune, Shetty declined to comment on the report. “WazirX is headquartered in Mumbai and Bengaluru, and there is no change in our operating procedure,” the company said in a statement.

BuyUcoin’s Bhatt admits the company has considered relocating from India but says that “[moving is] not a topmost priority as we would like to serve users in India.”

Anndy Lian, Singapore-based chairman of BigOne Exchange, a cryptocurrency exchange based in the Netherlands, expects investors to leave India’s crypto market for rivals in Singapore and Dubai.

“Constantly, we have been asked by Indian communities to start in India. We do not have intentions to set up a base in India currently,” Lian says. “If the regulations are clearer, we might consider.”

 

Original Source: https://fortune.com/2022/04/23/india-cryptocurrency-exchanges-trading-regulation-tax-upi-payments-wazirx-coindcx-buyucoin/

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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As India seeks firm footing on cryptocurrency, investors await clarity

As India seeks firm footing on cryptocurrency, investors await clarity

Almost two months after the government proposed a taxation policy for income from trading in virtual digital assets (VDAs), there is still a lack of clarity on various aspects, experts said.

According to Pratik Gauri, founder of 5ireChain, a blockchain ecosystem, the wavering clarifications and piecemeal developments indicate that the government is feeling its way through the subject of crypto regulation, and with little or no precedent to go by, it is trying to find a foothold in understanding the various challenges it will face in implementation once regulations are in place.

“One thing that I’ve repeated in the past and would like to re-emphasise is that the Reserve Bank of India (RBI) and the government are grappling with the reality that cryptocurrencies are not a fad and are here to stay,” said Gauri.
The government proposed in the Budget 2022 on February 1 that income from the transfer of any virtual digital asset be taxed at 30 percent. It said no deduction of any expenditure or allowance will be allowed while computing such income, except the cost of acquisition. It also proposed that a loss from the transfer of VDAs cannot be set off against any other income.

This week on March 21, the government clarified that losses from the transfer of virtual digital assets cannot be set off against gains from another. Neither can mining costs be treated as acquisition cost for tax deduction.

With no headway being made on a bill to regulate cryptocurrencies, it’s still not clear whether digital currencies are legal. Although investors say the tax provisions have effectively legalised crypto trading, Finance Minister Nirmala Sitharaman has said that taxing cryptocurrencies does not mean it has been legalised – that matter is still being considered.

Tracing VDAs

Taxation and legality issues apart, there are concerns over the enactment of certain provisions that show up in the finer details.

“From the perspective of crypto exchanges, the biggest challenge the many platforms will face is traceability of cryptocurrencies and VDAs,” said Gauri. “With the government putting the onus of this aspect on the exchanges, it’ll be a real challenge to balance innovation in the crypto world along with efforts to keep things private.”

Among the challenges in implementing the crypto tax provisions will be the monitoring of investor activity and preventing them from accessing more favourable crypto markets abroad. The crypto regulations that are in the offing and the severe tax incidence will be detrimental to the development of India’s crypto ecosystem, experts said.

“February 1, 2022, marked another day that the crypto industry and the crypto community would like to roll back,” said Raj Kapoor, founder of India Blockchain Alliance. “The community has taken strong exception to the government’s clarification on the taxation of cryptocurrencies as it is sure to have a stymieing impact. The lack of a provision to offset losses will drive away investors from KYC-compliant exchanges and will leave them literally with the devil’s alternative of accessing grey markets and offshore havens, completely defeating the very purpose of the tax.”

The proposed taxation measures will discourage retail investment in the emerging asset class because it denies them the benefit of setting off losses. Investors could cough up a heavy tax even if their trading activity suffers an overall loss.

Experts said there could be a flight of funds, restrained retail participation, and novel ways to circumvent these provisions, defeating the very purpose of taxing VDAs.

Aliasgar Merchant, developer relations engineer at Ignite, which works in the blockchain space, said the idea put forward by the government is tricky and does not take into consideration all aspects of crypto trading.

Instead of the offset regulation placing an unnecessary burden on the retail investor, a solution could be to have taxes based on exchanges and not individual VDAs, just as profit and loss are cumulatively treated for equity transactions across stock exchanges, Merchant said.

Looking for loopholes

“Another aspect totally overlooked by the Indian government is the presence of decentralised crypto exchanges as these platforms are out of the reach of government entities, making it difficult to audit and control transactions that take place through them. Such stringent laws which are heavily flawed will open doors to people looking for loopholes and may spark a move to decentralised crypto exchanges,” Merchant added.

Additionally, for those engaged in mining of VDAs, the government has clarified that all costs and investments towards equipment can’t be adjusted against any gains. Such expenses will be treated as a capital investment and only depreciation may be allowed to be claimed against them.

The measures may constrain India’s potential to develop into a global hub for crypto activity – in the way local information technology companies did – and extend use-cases of VDAs, experts said.

“While the Ministry of Finance works actively on regulating crypto, it’s crucial to understand that despite the various challenges, the industry holds immense potential,” said Raghav Gupta, founder of Equidei, which operates a decentralised finance platform.

Need for innovation

According to Gupta, it’s equally pertinent to incentivise innovation. Blockchain-based technology must be cultivated by providing developers ample space to grow so that India doesn’t miss the Web3 revolution.

Web3 refers to the next version of the internet where services run on blockchain and are decentralised.

Anndy Lian, Asia chairman of BigONE Exchange, a crypto trading platform, said it will be quite a task keeping track of VDAs.

“My question to the Indian government is: how are you going to account for each and every VDA? There are almost a few new coins every day in the market,” he said. “Assuming they bought 50 new coins each year, the effort for the investor to report tax and the regulators to monitor it would be a big issue. I urge the government to take progressive steps for crypto taxation. By doing so, you will see healthier trades and more foreign investments flowing into the country.”

All eyes will now be on the long-awaited cryptocurrency bill, although recent developments may be a reason for tempering hopes with caution.

Original Source: https://www.moneycontrol.com/news/business/cryptocurrency/as-india-seeks-firm-footing-on-cryptocurrency-investors-await-clarity-8273811.html

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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