It was recently reported by the Reserve Bank of India that the country is ready to launch its very own digital currency. The launch is planned for April 1, as announced by the Minister of Finance of India, Nirmala Sitharaman.
The information about this was announced by the Finance Minister of the country during her budget speech. In addition to this, the statements made by the Finance Minister indicated that the country is finally closer to adopting cryptocurrencies after many years of wavering on its stance, having a hard time understanding how they wanted to regulate the market.
As many countries around the world are fighting towards dominance in the cryptocurrency market, it seems to be the right decision for India to take a friendly attitude towards the cryptocurrency market, but, as of now, it is a bit unclear how exactly the country will decide to go about with its Crypto Bill.
It was also announced by the Finance Minister of the country that India plans to tax income on cryptocurrency transactions and transfers of virtual assets at 30 percent. According to her, this would remove uncertainties about the legal status of crypto transactions in the country.
While this is a very important decision, India is not the first country to further push the idea of digital versions of their currencies. One of those countries that have already announced plans about the same aim is China, which is also trying to take advantage of the new technologies and make transactions more efficient.
However, looking at China’s example, it can be said that a country can be very much crypto-friendly, while not letting the population have access to any crypto trading services. Also, some of the market experts are claiming that the steep tax rate that India is planning to adopt on crypto could very much affect the crypto trades in the country, which has become very popular.
Imposing Tax on Trading
Although the leadership of the country issued warnings against the risk of money laundering and terrorist financing as well as volatility risks associated with cryptocurrencies, the market is growing very fast in popularity.
After the information about the crypto tax was announced, the Chief Executive Officer of Vauld, which is a Singapore-based crypto exchange, Darshan Bathija, noted that introducing the tax rate on crypto trading now makes it official that there are almost no concerns left around banning crypto trading.
However, it should also be noted that the tax rate is quite high, which could lead some of the traders to decide to not trade cryptocurrencies, or rather move to the platforms in other countries.
This, in turn, would reduce revenue for the Indian government. The announcement of India regarding the taxation of cryptocurrencies was followed by several important developments in the market. After weeks of a downside, BTC rose over 2 percent quickly after the announcement. While the country still is far from having a full-on regulatory framework for the cryptocurrency trading market, the recent announcement is already a huge step forward.
Earlier, the country even noted that they were thinking about banning crypto trading altogether. After such an announcement, everyone was confused about what India would actually do. The recent taxation announcement makes it a bit clearer – India is not planning to ban crypto trading, at least for now.
Crypto Regulations & India
A very interesting thing about the situation in India is that while the leadership of the country was very much showing negative views towards crypto assets, people of the country have continued to grow interested in the market.
The demand for cryptocurrency trading has skyrocketed in the country over the past year. In fact, in June 2021, the local crypto market has increased as much as 641 percent, which is huge growth.
One of the main reasons behind the huge popularity of cryptocurrencies in the country is the general trend around the world, with the growing demand for crypto assets. There are numerous cryptocurrency exchanges available in India, which offer traders a diverse array of services. These exchanges allow traders to use automated cryptocurrency trading systems or simply trade digital assets manually, on their own.
automated trading system cryptocurrency
Even people from the most remote parts of the country have recently shown interest in the cryptocurrency market in India. Because there are so many crypto exchanges available in the country, the demand is being somewhat met.
According to the Finance Minister, one of the reasons behind providing the specific tax regime is the huge magnitude of increase in the digital transactions in India, which shows how much the people of the country are actually interested in the market. On the other hand, India also announced the launch of a new digital rupee, which will further support cheaper and more efficient currency management.
India has been working on a cryptocurrency regulatory framework for a long time now. The country first announced that it was thinking of ways to regulate the market a few years ago. The long-awaited Crypto Bill of India was supposed to be voted on by the Parliament of the country during the Winter Session of the Parliament but was later delayed for February due to the additional changes needed in the bill.
