Crypto Exchange Volumes Surge as India Introduces 30% Tax on Crypto

Amid rising interest in cryptocurrencies in the Indian subcontinent, the national government’s decision to make digital assets taxable received mixed reactions from investors and entrepreneurs.

Nonetheless, the decision seemed to act in favor of the Indian crypto exchanges as trade volumes of some of the top exchanges in the country surged. 

Crowds Embracing the Move?

Indian entrepreneurs seem to be divided about the implications of the Indian government’s announcement to bring the transfer of digital assets into the 30% tax bracket.

On the other hand, Indian crypto exchanges were experiencing a surge in trading volume after finance minister Nirmala Sitharaman made the announcement during the budget session of parliament on Tuesday. 

Binance-owned Indian exchange WazirX’s 24-hour trading volume in the after-hours of the announcement soared by over 50%. Additionally, WazirX’s token WRX’s price jumped by 25.3%, in 24-hours. Further, the trading volume of local competitors CoinDCX also surged by 10% with a total volume of $ 6.17 million over the last 24-hours at press time. 

Apart from the taxes, the Indian Finance Minister also proposed to provide for a Tax Deducted at Source (TDS) on payment made in relation to transfer of ‘virtual digital assets’ at the rate of 1% of such consideration above a monetary threshold. 

Reporting by local publications highlighted conflicted views from Indian entrepreneurs. WazirX CEO Nischal Shetty, welcomed the planned taxation, he said:

“The biggest development was a clarity on crypto taxation. This will add the much needed recognition to the crypto ecosystem of India. We also hope this development removes any ambiguity for banks, and they can provide financial services to the crypto industry.”

On the other hand, Indian Investor Rakesh Jhunjhunwala, also known as the “Warren Buffett of India,” was of the opinion that the Indian 2022 Budget is the ‘death’ of crypto in India.

Indian Government’s Contradicting Stance

While the taxes received a bitter-sweet reaction from Indian investors and crypto enthusiasts the intriguing part was that currently there is no law that defines the legality of cryptocurrencies in India. 

Local politicians like senior opposition leader Sachin Pilot were quick to comment about the government’s contradicting stance on digital assets. He reportedly said:

“There’s no law on digital currency but there’s a tax against it now.”

Nonetheless, the prices of most traded coins vas INR on Indian exchanges like Bitcoin, Ethereum, XRP, MATIC, Cardano, and Dogecoin remained unchanged which was a good sign. 

Furthermore, the Indian government has also laid down plans for rolling out India’s CBDC ‘Digital Rupee’ to be issued by 2022-23. While the recent developments do act in favor of the larger crypto narrative, further clarity in terms of the asset class from the Indian government would be looked forward to.