The Indian crypto industry faces a wait that could span up to two years for a gentler crypto tax structure as expressed by the CEO of the domestic exchange WazirX. A 1% Tax Deducted at Source (TDS) on crypto deals, implemented by Indian authorities last year, triggered a significant plunge in trading volumes. The heightened costs compelled market makers and fervent investors to trim their involvement, with a local exchange attributing a staggering 97% fall in trading volumes at domestic platforms to this tax within only 10 months.
Principal of WazirX, Nischal Shetty, expressed skepticism of instantaneous TDS reduction in an interview with Bloomberg, given the lack of formal discourse between the crypto industry and legislative players. Meanwhile, regions such as Hong Kong, Dubai, and the European Union have already leaped forward, establishing unique regulatory structures, aiming to protect their investors and crystalizing the landscape for digital asset firms also mulling over international expansion amidst heavier US regulatory oversight.
Despite the ambiguous panorama, Shetty remains tentatively optimistic about India taking strides towards a more crypto-friendly policy, although the precise steps leave room for speculation. A great number of Indian investors have diverted from local to foreign-based crypto trading platforms prompted by the controversial TDS. In a startling report by CoinDCX, a WazirX competitor, Indian exchanges purportedly hemorrhaged over 2 million users between February and December, correlating with the tax announcement. Concurrently, international platforms enticed over 1.5 million Indian clients according to CoinDCX approximations.
The Chief Public Policy Officer at CoinDCX, Kiran Mysore Vivekananda, voiced out in a CryptoNews interview that the central government’s objective of deterring individuals from crypto investment via the TDS has backfired spectacularly. The country instead continues to see burgeoning crypto adoption, with data indicating 18% of engaged users on the top five offshore exchanges to be Indian. The Chainalysis report even profiled India at the forefront of crypto adoption on various metrics with the nation owning the world’s second-highest crypto transaction volume.
Though currently on the back foot, the call for global crypto regulations from the Indian end holds a promise of future progress while grappling with its perplexing TDS scenario.
Source: Cryptonews
