The end of last year has changed a lot for the global crypto market, let alone the market in the US.
But amid the controversies of bad apples like FTX, the subsequent drop in crypto value, and falling Bitcoin and Ethereum prices there’s some actual market growth news (which would be great for US and EU based crypto exchanges and web3 projects). This news comes to us courtesy of a new Indian law.
This law — which became synonymous with controversy among the Gen Z and Millenials who invested or operated crypto business — introduces hefty taxation.
Despite crypto existing for over 12 years, this law represents one of the first cases of a country taxing crypto assets.
Based on the most recent reports (cited by coindesk), an overall total of $3.85 billion was transferred from February through October, the study said.
That report provides the first monetary valuation of the weight of India’s controversial crypto tax policy on domestic exchanges. Prime Minister Narendra Modi’s government recently declared a tax as high as 30% tax on crypto profits and a 1% tax deducted at source (TDS) on all transactions on Feb. 1, 2022.
The 30% tax became official on April 1, and the 1% TDS on July 1. When the taxes were announced the industry was unable to prove its initial bet that the levies would “kill liquidity.” The Esya Centre report found that domestic exchanges lost 81% of their trading volumes in four months after the imposition of the much debated 1% TDS rule.
Based on the comments from industry leaders in the country, Nischal Shetty, CEO and founder of WazirX, one of India’s biggest exchanges, said Indians would “find ways to not be part of the [domestic] system because people are not going to leave crypto.” adding a reassuring claim that centralized exchange businesses would become “unviable” in India if the current trend continues.
Our take on this? Keep an eye out to see if this trend accelerates or decelerates.