After much speculation for almost a decade, cryptocurrency in India has finally got a set regulation. During the Union Budget 2022-23, the Indian Finance Minister, Nirmal Sitharaman, has announced the imposition of 30% cryptocurrency taxation on incomes from digital and virtual assets. For digital tokens shared as gifts, the recipient is bound to pay tax. Although these cryptocurrency regulations could impact the income of investors, many of them have welcomed the set rules, which could avoid confusion in the future.
Cryptocurrency in India is a major concept recently. Since the Covid-19 pandemic stroke the country and left the economy to tumble, Indians have started relying on cryptocurrency investment with the hope to reap good benefits. The Bitcoin rally in 2020 and the unexpected Shiba Inu price surge in 2021 made many Indians profit from digital tokens. However, despite the growing dominance and adoption, cryptocurrency regulations were much needed. Although the central government has come up with initiatives, nothing got practical so far. Amid speculations that India will roll out a complete ban on virtual assets, the government has decided to impose 30% cryptocurrency taxation. Fortunately, India's cryptocurrency regulation announcement didn't affect the top tokens like Bitcoin, Ethereum, Solana, Matic, Dogecoin, etc. The Finance Ministry has also unleashed its plan to introduce a Digital Rupee backed by the RBI and government which will come to effect in 2023.
To be precise, Indian's are more relieved to hear the set cryptocurrency regulations at this point. For a very long time, the country has considered banning virtual currencies completely. There have been instances where Indian investors spent sleepless nights thinking about their investments. Therefore, at this point, all they wanted was a clear roadmap to what the central government is going to do.
According to a Deloitte survey, over 82% of Indian planned to invest in cryptocurrency when the government provides more clarity on regulations. Out of the 1,800 respondents, 55.2% admitted to having invested in cryptocurrency. Besides, 26.8% said they have not invested, but will consider the option when government provides more clarity on cryptocurrency regulations. This survey clearly indicates India's mindset and willingness to try their hand on digital tokens.
Currently, over 15 million Indians have invested in cryptocurrencies so far. This number is expected to grow exponentially in the coming years. Since the Indian government has also shined the light on the regulations they are imposing, investors seem to accept the changes and view it as an improvement.
Although the number of investors is huge, both cryptocurrencies and blockchain technology need more clarity to reach more investors. Currently, only educated candidates and people who have heard about cryptocurrency from their acquaintances are majorly investing in them. But if this needs to change, regulation is an important move. Now the media and online sources will come out and discuss more cryptocurrency and also the underlying blockchain technology. Eventually, more people will get to know and try their hands on virtual assets.
As mentioned earlier, the cryptocurrency market is a vast area where many things happen. Therefore, people were always confused about what to do and how to move forward. The regulations will help set a standard in accordance with the education, customer protection, taxation, KYC, and compliance. Besides, investors can directly estimate what amount they will pay as a tax rather than relying on their accountants. Even cryptocurrency exchanges will evolve and make themselves comply with the cryptocurrency regulations over time.
Cryptocurrency and the speculation over regulations in India go way back to 2013. The Reserve Bank of India (RBI) has issued a warning back then not to fall for virtual currencies. The statement came after digital tokens become a major talk back in the days. However, since the banks continued to allow transactions on cryptocurrency exchanges, in 2018, RBI issued a circulation asking commercial and cooperative banks to refrain from allowing money for crypto exchanges. Later on, the Supreme Court of India lifted the curb on cryptocurrency imposed by RBI.
2021 was a big year for cryptocurrency in India. The speculations around bans and regulations continue to spread like wildfire. The government has commissioned an Inter-Ministerial Committee (IMC) to study the issues surrounding digital tokens and propose apt actions that can be taken to avoid them. Towards the end of the year, PM Narendra Modi chaired a high-level meeting where he indicated the government's strong stand against cryptocurrency investments.
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