Tax exemptions, subsidies, and other financial support needed to support crypto sector
Representational image. AFP
The crypto sector in India needs urgent support from regulators to create a business-friendly environment for the growth of blockchain companies. We are delighted the Finance Minister is actively engaged in creating a global consensus for policy around crypto, but Indian crypto entrepreneurs are looking for rapid implementation of the regulatory framework for crypto exchanges.
Allow investors to offset, carry forward losses
To provide a fair playing field for crypto assets, allowing crypto investors to offset and carry forward their losses, as well as raising the TDS exemption limit to a reasonable level, would be positive steps toward responsible mass adoption of digital assets and propel India into the next phase of the Web3 economy.
The average age of cryptocurrency investors is below 30, indicating that the government should consider rationalising the 30 percent tax rate so that young investors—just beginning their financial journey—can gain both stability and flexibility when investing.
Create secure, compliant digital wallet infra services
As institutional investors consider this emerging asset class, it is highly important to create secure and compliant digital wallet infrastructure services that are regulated and licensed. With this in place, stakeholders—both retail and institutional—will gain the necessary trust to use digital currencies with ease.
India’s decisive action in setting up a tax policy for cryptocurrencies is a positive step towards the development of a vibrant financial sector, what’s problematic is the higher rate of taxes.
The government should promote the growth of a digital ecosystem in India by launching more accelerator programs in partnership with leading companies and introducing web3 technologies as mainstream subjects in academic institutions. Ample funds should be set aside to enhance technological capabilities to support creator-led campaigns within the metaverse. To this end, the Union Budget could both create a regulatory framework that supports tech startups and extend grants for cross-disciplinary research to commercialise disruptive technologies safely.
Create incubation centres for blockchain startups
For the blockchain industry, the government could establish incubation centers for blockchain startups and allocate funds to boost R&D in blockchain technologies. This support would help India become the blockchain capital of the world and would require a legal and regulatory framework to manage the sphere without affecting security, privacy, and user-friendliness.
The government must ensure fast-track implementation of the necessary regulatory framework to establish strong foundations for crypto exchanges.
Cryptocurrencies and Central Bank Digital Currencies (CBDC) are on opposing ends of the blockchain technology spectrum. Nevertheless, they can coexist by recognizing the potential of CBDC to facilitate transactions between multiple cryptocurrencies. As the regulator, the Reserve Bank of India (RBI) must act responsibly and undertake the necessary checks before deciding to use new technologies such as Defi lending. We look forward to positive government announcements on this front.
India is currently a key player in the global Web 3.0 and blockchain economy. With an estimated 15 million cryptocurrency users and 11 percent of global Web 3.0 talent, the country is bursting with possibility and is perfectly poised to take on the Government of India’s mission of ‘Make in India’ to bring forth the most innovative technologies to the world. With 450+ Web 3.0 and blockchain startups operating in the nation, India’s IT ecosystem is ready to make a mark in the digital economy.
Crypto gains tax hits volumes
The introduction of a 30 percent crypto gains tax in the FY22 Budget has seen crypto trading volumes on domestic exchanges crash by as much as 90 percent, prompting many transactions to move offshore, making them more difficult to track. Despite the impact of taxation, the size of the market in India towards digital assets is still a positive sign for the industry. With the increasing magnitude of digital transformation and the economic revolution taking place in India, the country is set to be a key player in the global Web 3.0 and blockchain economy.
The COVID-19 pandemic has had a devastating effect on the cryptocurrency industry in India. The cryptocurrency industry is ready and willing to contribute to a modern, tech-driven India. To foster continued growth, the government should look at providing stimulus measures in the form of tax exemptions, subsidies, and other forms of financial support. This would not only help to offset the financial losses incurred due to the pandemic but provide a strong foundation for the industry to reach its highest potential.
The global services and product development space is set to explode with the introduction of several new opportunities for Indian tech companies. By focusing on utilizing blockchain technology to solve real-world problems and producing actionable results, these companies can not only attract Foreign Direct Investment and create more jobs in the tech domain but also become a critical part of the Web3 ecosystem. With strategic investment in blockchain technology, Indian tech companies can be at the forefront of a burgeoning new industry.
The writer is Co-Founder & CEO at Trace Network Labs— a technology platform. He tweets @raolokesh_tn @trace_network Views expressed are personal
Read all the Latest News, Trending News, Cricket News, Bollywood News,
India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.