Anndy Lian

Global players cheer crypto tax as first step to nod

Mumbai: The worldwide crypto community has lauded India’s announcement to tax cryptocurrencies and develop a blockchain-based, regulator-backed digital currency as a significant step forward toward legitimising the asset class and encouraging innovation in blockchain technology.

“This means that India recognises the importance of crypto, digital assets and their underlying technology, blockchain, too,” said Anndy Lian, Chairman of the Singapore-based BigONE exchange. “The next crypto bull market could be led by India.”

On February 1, Finance Minister Nirmala Sitharaman announced the government would impose a blanket tax rate of 30% on the transfer of “virtual digital assets.”

Global crypto players believe the tax clarity will enable fence sitters to activate their India investments.

“The tax clarity is a very positive step forward. The Indian government is taking a progressive stance by going ahead in the direction of innovation. By bringing in taxation, the government legitimises the crypto industry and trading to a large extent,” said Serdar Bisi, CEO of Tycoon, a Cyprus-based crypto startup. “This makes it now possible for institutions and corporations that have been sitting on the sidelines because of uncertainty to participate in this emerging market and industry.”

Adam Mazzaferro, Founder of Australia-based @pay, said people forget that cryptocurrencies are simply another form of asset class, just like shares and real property, and should be treated in the same light, and the Indian government’s announcement has validated the asset class.

“Indian government’s move to tax cryptocurrencies is welcomed as it is consistent with how other modern economies are treating cryptocurrency,” Mazzaferro said. “Although the taxable rate of 30% is relatively high, any form of government regulation of cryptocurrency is encouraging as it goes a long way towards validating the asset and making it more mainstream and widely accepted in everyday business and commerce.”

Kaz Patafta, co-founder of First Eleven Club and Director of McDonald Patafta & Associate Lawyers, an Australian law firm, said the imposition of crypto asset tax now solidifies the adoption of crypto in India and allays concerns of a regulatory ban in one of the largest transactional markets for virtual assets.

Wahid Chammas, a Cyprus-based investor and chairman of Faith Tribe, an open-source fashion design platform that works with many Indian fashion designers, said that these designers will, for once, have a fighting chance to thrive in the highly competitive global marketplace. “But it would be such a shame for the new crypto tax regime to render them uncompetitive with this highly regressive tax,” he said.

Global crypto experts believe the government’s announcement of 1% TDS at the time of transfer of digital assets will be a powerful tool to track transactions.

Pratik Gauri, CEO and Founder, Singapore-based 5ire, said using Tax Deducted at Source (TDS) was a necessary element and, with the increasing awareness of KYC/AML and how shady segments of society often use crypto to launder money, TDS can provide the government with the needed information and money to build an infrastructure for crypto monitoring for tax purposes.

“I do not think that 1% is a prohibitive amount. And it will simultaneously bring needed foreign exchange and investment to India,” he said.

On Tuesday, Changpend Zhao, CEO of Binance, the world’s biggest crypto exchange, said on Twitter, “Crypto is legally recognised in India with a 30 percent tax.”

However, experts say that the recognition of digital assets under income tax is not akin to granting legal status.

According to Charles Tan, Head of Marketing at Coinstore, India is transitioning from an unregulated to a government-monitored crypto market, which will benefit all stakeholders in the industry.

Global crypto exchanges are also keeping a close eye on India’s progress on its CBDC that, according to the budget announcement, will be launched in FY 22-23.

Jay Hao, CEO of OKX.com, said that central banks around the globe have already launched or are about to launch their digital currencies and that India was slightly lagging in the digital currency race, mainly due to the regulatory hurdles and reluctance to accept the growing popularity of digital assets/digital currency around the world. “I hope the announcement made by the Finance Minister regarding CBDC is implemented without any further delay as it will give a much needed push to the blockchain industry in India,” he said.

The announcement, according to Santiago Sabater, Co-founder of DeFiChain Accelerator in Germany, was a step in the right direction, and the security in taxation is the first step for adoption to progress.”If India manages to support crypto startups, create more fair regulations, and enable cooperation with banks, it has the potential to become the world’s leading crypto-hub for web 3.0,” said Sabater.