Cryptocurrency players struggle to operate within one percent TDS policy

Cryptocurrency players struggle to operate within one percent TDS policy

The imposed tax has adversely impacted short-term investors and day-to-day trading volume

A 30% taxation on income from cryptocurrency and other virtual assets, was followed with the government’s decision to add a one percent tax deductible at source (TDS) on cryptocurrency transactions from July 1, this year. Even as this appeared as the first step towards regularising the sector, it is felt that the industry is reeling under an adverse impact of such steps. “From the perspective of cryptocurrency trading volume, it has dropped. The implementation of these tax laws has caused the stagnancy of Indian cryptocurrency markets. Prices are also getting lower. Short-term and day traders will get affected due to the implementation of the one percent TDS,” Shivam Thakral, CEO, BuyUcoin, told FE Online.

Industry expert opined that the move by the government will ward off investment from international players. According to Anndy Lian, chairman, BigONE exchange, this will affect the market’s liquidity and foreign investors will look to stay away from Indian markets. “It will not be sustainable for investors in the long run. Active traders will get adversely affected as it would decrease day time trading. The overall market conditions would deteriorate, as more Indian cryptocurrency exchanges will look to settle outside,” he added.

What is to be noted that due to looming uncertainty over regulations and policies, a few companies have already shifted base to other markets such as Dubai. “The transition of Indian exchanges will have an impact on the overall cryptocurrency scenario within a year. I think the Indian government will see a huge efflux of cryptocurrency investors and developers in the near future,” Lian said.

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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‘Backtracking Never A Good Policy,’ Experts Comment As India’s Finance Minister Hints At Banning Cryptos

‘Backtracking Never A Good Policy,’ Experts Comment As India’s Finance Minister Hints At Banning Cryptos

My additional comments:

Stating this upfront is a good strategy. I believe FM Sitaraman is giving a warning to all that if cryptocurrencies become too out of hand, there is a chance to revise the regulations. I do not see this as bad backtracking. If you looked at it from FM’s perspective, if crypto becomes very successfully and they felt that the market is receptive, open and ready for this new digital currency, there might also be other possible incentives that can be introduced. Reducing from 30% to 10% is not backtracking right?

In my opinion, the revision is reasonable and it is an act to protect the India market.  The digital rupee is not an easy task for India. India is a big economy and may need to exercise more control over its currency before adopting it to its fullest scale. Potential security issues can be a problem at the start and I urge experts to look deeper into the direct and indirect costs potentially linked to the implementation so as to allow them to drive innovation to the peak.

 

‘Backtracking Never A Good Policy,’ Experts Comment As India’s Finance Minister Hints At Banning Cryptos

KEY POINTS

  • India might ban cryptos even after taxation
  • India to tax cryptos at 30%
  • Industry seeks clarity on new announcements
  • ‘Backtracking never a good policy’ says expert

Conflicting signals from the Indian government on the legitimacy of cryptocurrency has not gone down well with the industry. International Business Times spoke to several experts to gauge the sunrise sector’s mood and all of them asked for just one thing – clear directions from the top.

The federal budget for the year beginning April seemed to chart out a path when it imposed a 30% tax on cryptocurrencies. A few days later, however, Finance Minister Nirmala Sitharaman said she could still ban the cryptos later. Industry insiders believe that backtracking is not a good policy especially for a big economy like India.

In a recent interview to The Economic Times, Sitharaman said, “Banning or not banning will come subsequently when the consultations give me inputs. But would you say till then I do not even tax the huge profits being transacted? I will. Legitimate or not legitimate is a different question, taxing is completely my prerogative.”

Raj Kapoor, founder of India Blockchain Alliance and Chief Growth Officer at Chainsense, said, “Backtracking is never a good policy and I feel the statement should be viewed as a statement where we have taken a baby step forward but the steps and strides seem miles away.” Kapoor believes that the announcements made in the federal budget about cryptos have a lot of grey areas that needs to be addressed.

“When we say ‘ban’ crypto currencies what exactly do we ban? What are the permissible exemptions? Do we permit crypto currencies to make in platform payments the largest exemption issue? What is the manner you permit purchase of exempted cryptocurrencies for exempted use by sovereign currencies? Questions galore, solutions in the grey,” he told International Business Times.

Shivam Thakral, chief executive officer of Indian exchange BuyUcoin, believes that the finance minister might be referring to a “worst-case scenario like when most (Financial Action Task Force) member-countries decide to ban crypto.”

“There’s also a burgeoning concern among global regulatory watchdogs that crypto can have an adverse impact on economic stability in countries like India. We’re really optimistic that the government of India will address these concerns and bring in a strong regulatory framework to tackle all these issues to become global leaders in crypto & blockchain industry,” Thakral told International Business Times.

On the other hand, Anndy Lian, chairman of BigONE Exchange, believes that stating upfront that the government might ban cryptos later is a “good strategy.”

“I believe FM Sitaraman is giving a warning to all that if cryptocurrencies become too out of hand, there is a chance to revise the regulations. In my opinion, the revision is reasonable and it is an act to protect the Indian market,” Lian told International Business Times.

India has decided to introduce a 30% tax on cryptos and plans to work on a digital rupee backed by blockchain beginning the financial year starting April.

“The quantum of taxation is something that is discouraging.  Also, specific sections regarding TDS are still confusing. This might act as a dampener for greater adoption,” Gupta told International Business Times.

“We must remember this is just the beginning of the larger process of adoption, multiple discussions are needed to come up with better systems or processes. But we are very hopeful that right actions will be taken,” he said.

 

 

Original Source: https://www.ibtimes.com/backtracking-never-good-policy-experts-comment-indias-finance-minister-hints-banning-3391556

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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Where does Singapore’s crypto policy go from here?

Where does Singapore’s crypto policy go from here?

Singapore, the leading economy in Southeast Asia, has long been thought of as welcoming to innovation, particularly in the fintech sector as an engine for growth. With that embrace of innovation came a forward-looking embrace of all things cryptocurrency and blockchain, attracting startups from around the world, with Singapore ranked as the second most popular country for ICOs in 2018. This approach has contrasted with China, which has banned crypto trading and mining, and in the U.S., where the Securities and Exchange Commission sought to play enforcement catch-up, following the ICO boom.

It seemed to the outside world that up until recently, Singapore was leading the way on crypto. As reported last summer, while many parts of the world was hellbent on cracking down on crypto, “crypto players like Binance have found Singapore to be a paradise of opportunity, even while a regulation storm looms over the industry in other parts of the globe.” Even as recently as last October, after more crackdowns on crypto in China, the city-state of Singapore was seen as a chief beneficiary of fleeing businesses.

This liberal status quo persisted even as over 300 crypto companies waited for a license to operate in Singapore under the 2020 Payments Services Act (PS Act), following 2019 legislation from the Monetary Authority of Singapore (MAS). An optimistic 2020 report that the system of providing a temporary exemption from licensing under the new law amounted to “regulatory acceptance.” Which, coupled with Singapore’s robust reputation, ensured it’s “likely to make the country a haven for crypto exchanges and startups over the next few years.”

How off the mark has that prediction proven to be? Fast forward to the start of 2022, with only a handful of licenses awarded by MAS to a few well-resourced and well-connected concerns, coupled with the world’s most popular crypto exchange Binance withdrawing its application and shutting down its exchange operations in Singapore, one wonders: how has the crypto dream for Singapore proved so illusory?

To answer this rhetorical question, let’s go back to before 2020 when Singapore was a powerful magnet for crypto startups and businesses, starting in the ICO boom years from 2017 when the authorities classified crypto as digital commodities.

In March 2018, speaking at Money 20/20, Ravi Menon, the head of MAS, wryly accepted that “not all developers and programmers in the crypto world are anti-establishment anarchists” but expressed concerns about issues around the use of cryptocurrencies for criminal activity, how KYC and money-laundering (AML) regulations applied, and the use of crypto in ransomware attacks. Equally concerning to Menon and MAS is the perceived threat from the volatile nature of cryptocurrencies, and the risk this posed to retail investors. These concerns lie behind the legislation in 2019-20, bolstered further in January 2021 to ensure crypto regulation was aligned with the requirements of the Financial Action Task Force (FATF).

Clearly, what gave the impression of continuity with the liberal pre-PS Act approach was the fact that crypto companies were given a temporary license exemption. And what better way to illustrate this discrepancy between image and reality than an on-camera Bloomberg interview in November 2021 when Menon reiterated the policy aim to make Singapore a global center for crypto business, was based on “strong regulation” to avoid the multitude of risks involved.

“But not to get into this game, I think, risks Singapore being left behind. Getting early into that game means we can have a head start, and better understand its potential benefits as well as its risks,” Menon added for clarity. As the Bloomberg report observed, this forward-looking approach “can be a fine line to tread, given the crypto industry grew up with few regulations, so many players balk at government officials’ attempts to impose guardrails.”

From my perspective, Singapore’s aim has never been to grant all applicants a license, rather to use the process to implement a highly selective approach. “We don’t need 160 of them to set up shop here. Half of them can do so, but with very high standards, that I think is a better outcome,” Menon has said.

Singapore’s current approach is also at odds with the crypto startup spirit of transparency and flexibility. In contrast, under the current approach, MAS rarely if ever tells crypto applicants what is required to succeed. Thanks to the absence of objective criteria available to the public, this gives the impression that MAS favors the elite, with very little real transparency as to why these decisions are made. I’ve heard it argued that MAS should get a free pass as its job is to protect the public, and in that regard, MAS is not alone as a financial regulator in its opaqueness.

In a similar jam as crypto startups in Singapore, the U.K.’s crypto trade body, CryptoUK, wrote to the Chancellor at HM Treasury regarding the crypto asset industry last year. It encountered similar concerns about the pace of crypto regulation, the lack of feedback, and the risks this posed to the post-Brexit economy — all of which echo the situation crypto businesses currently face in Singapore.

So, while I recognize on a basic level that MAS as a regulator is “only doing its job” like the case of the U.K., the danger is the current application process will only benefit an elite handful of larger organizations that have the resources to sit and wait. With the result being, they leave for friendlier jurisdictions. Binance is already reportedly looking to move its corporate HQ to the United Arab Emirates, and when that deal is sealed, no doubt many crypto startups will be sorely tempted to follow suit and move, too.

My aim at the outset in writing this op-ed was to underline my belief in the long-term viability of Singapore’s crypto and blockchain ecosystem, based within a successful financial system that is the envy of Southeast Asia. I also welcome the latest guidelines from MAS designed to warn the public about the risks in trading and investing in cryptocurrency. These advertising guidelines are necessary, correct and forward-looking.

Finally, crypto trading can be dangerously addictive too. Singapore’s National Council on Problem Gambling (NPCG) should take the initiative to create a task force to cope with possible issues derived from crypto speculations or crypto betting. I appreciate this is no simple task, for example, the growth of crypto casinos operated from a decentralized network (DAO) can be a new problem, too, but I believe it is important to act promptly to safeguard the public and to get rid of the industry’s bad actors.

 

Original Source: https://forkast.news/where-does-singapores-crypto-policy-go-from-here/

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”.

j j j