- Regulatory ambiguity and new tax rules could disrupt India’s current crypto ranking.
- The country will determine its regulatory stance next year.
- India is currently the fourth country when it comes to crypto adoption.
India’s position as a leading cryptocurrency market in Asia is threatened by the country’s introduction of a 30% capital gains tax on cryptocurrency investments in April and a 1% tax deducted at source (TDS) on earnings generated through crypto in July, both of which have contributed to regulatory uncertainty.
These new taxation restrictions are expected to push many people away from the cryptocurrency industry in the second half of the year, according to a recent report. This is expected to create a quick decline in the adoption of cryptocurrencies in India.
The Indian government is in the process of establishing its position on the legality of cryptocurrencies in preparation for submitting its answer to the Financial Action Task Force (FATF) for the “mutual review” of the nation by the beginning of 2023.
The government’s statement stated:
One of the questions that we have to respond to is on the legality of cryptocurrencies, since we have already started to tax them. We will finalize our responses by February-March 2023. We have to respond to the FATF by May.
They added that they are expecting the report from the Financial Stability Board, which will be essential from the standpoint of crypto law. Additionally, they are anticipating that it will address how to handle wallet transfers of cryptocurrency.
Digital asset investments by young Indian professionals exploded in 2021, propelling the country to second place on Chainalysis’ Global Crypto Adoption Index. India fell to the fourth position this year, even though it remains one of the top 20 nations adopting cryptocurrencies.