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In less than 15 days, the world will see the fourth Bitcoin halving event. With this, Bitcoin supply growth will be cut in half, skyrocketing an already comfortable crypto price. So far, the year 2024 has been good for the ecosystem with BTC and Bitcoin ETF approval reaching an all-time high.
As the world moves towards becoming a Web3 citizen, India is looking at government-friendly measures. The ecosystem was optimistic about a TDS overhaul during the budget, but to no avail. "We are discussing with the government at various levels, trying to explain to them why these taxes are actually counterproductive to what the government is trying to achieve, what the industry is trying to achieve and why this is leading to innovation dying out. . India," shares Avinash Shekhar, CEO and Co-Founder of Pi42.
During the Union Budget 2022, the government imposed one per cent TDS (tax deducted at source) on the purchase and sale of VDAs under section 194S of the Income Tax Act, 1961. In March , Union Finance Minister Nirmala Sitharaman made the government's proposal. Be clear about cryptocurrencies: "We have not regulated them even now. But they cannot be currencies, is what I have always maintained, and that is the position of the government of India. Currencies must be issued with the fear of the government or the central bank, so that's a different story." However, India expressed concerns at the G20 and hopes that a framework will come into play.
But Mudrex's Edul Patel believes there is another reason why traders choose to go outside: "TDS is one of the reasons why many traders go outside. But in reality, many users also go outside simply because the "Service and product quality is better. The real way to win back users is to provide them with high-quality products and service experience." Since February 2022, between 3 and 5 million Indian users have moved their base to offshore platforms.
Operating in the crypto ecosystem has its fair share of advantages and challenges. As of H1 2022, there are over 450 Web3 startups in India. "Innovation is one part and legality is another part. So while you innovate and create wonderful products, stay compliant," shares Anuj Kumar Garg, VP of Blockchain at ZebPay. Starting in December 2023, India hit Binance and eight other crypto platforms with a show cause notice for non-compliance with anti-money laundering law. Apple and Google followed suit and retired at least three of their platforms.
There are over 19 million cryptocurrency investors in India. Talking about whether there are different trends compared between South Asia and India, Jyotsna Hirdyani, Head of South Asia at Bitget, shares: "I think there are certain fundamental differences in the behavior of Indian users versus the behavior of "Asian users in general. For example, Indian users are very risk averse." The majority of the country's cryptocurrency investors were in the 18-25 (45 percent) and 26-35 (34 percent) age groups last year.
While ecosystem players are hopeful of positive movement in the interim budget, Sathvik Vishwanath, Founder and CEO of Unocoin, feels that while the government is specifically asking for more taxes and higher TDS, what will they receive? change? "People compare it to gambling taxes, where it's very difficult to educate people or make them understand that cryptocurrency taxes are different from gambling. And as we know, cryptocurrency taxes have become very challenging. So I think there should be something significant or some competitive tax rules," shares Rahul Bhadoriya, founder and CEO of ESP Softtech and co-founder, Mr. Mint.
So where can we expect cryptocurrencies to be in the next 5 to 10 years? Saurav Raaj, founder and CEO of Tokenize, believes that with India being a hub of financial innovation, "I mean, the UPI and everything that has happened, we are way ahead of the world in that sense. And I think the biggest cryptocurrency innovations, or three web innovations, will also come from India." Furthermore, he shares that when you put these two together and apply them to different asset classes, such as asset trading and unlisted startup trading, it can create a huge innovation opportunity for each individual. Patel shares, โWe will see multiple global companies being built in India that are solving problems for users in this space, which will not necessarily be just exchanges or trading platforms, but real use cases.โ
Shekhar believes that in the next five to ten years cryptocurrencies and blockchain will be bigger than the Internet at its peak.
"We expected the next year to be bullish, but it seems to have started a little earlier," concludes Dr. Vishwanath. Bitcoin is currently trading above $70,000 and is expected to surpass $100,000 this year, while Ethereum sits just above $3,600.
(Spoken at Entrepreneur India's W3 Technology and Innovation Summit 2024)
