Official Tax Plans Boost India Crypto Exchanges as Sign-Ups Surge

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In Brief
  • India’s proposal to tax cryptocurrency profits 30% has proven to be a boon for the country’s crypto exchanges, having provided a tacit approval of the digital assets.

  • Since the government unveiled tax in its annual budget on February 1, daily sign-ups on India’s largest exchange Binance-owned WazirX have jumped almost 30%.

  • Although inhibitive, the tax demonstrates to prospective and erstwhile hesitant crypto investors the government’s acknowledgement of cryptocurrencies, if not yet tacit approval.

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India’s proposal to tax cryptocurrency profits 30% has proven to be a boon for the country’s crypto exchanges, having provided a tacit approval of the digital assets.

Since the government unveiled tax in its annual budget on February 1, daily sign-ups on India’s largest exchange Binance-owned WazirX have jumped almost 30%, according to co-founder Nischal Shetty. He said that on average, new clients put about 30,000 rupees to 40,000 rupees ($400 to $533) in their trading accounts.

Meanwhile, at rival CoinSwitch, new user ship is up 35%, according to founder Ashish Singhal. Its consumer education campaign has been paying dividends, with registered users up to 15 million as of January from 1 million a year ago. However, neither of the exchanges have disclosed how many customers they added in total since February 1.

Indian crypto tax

Although inhibitive, the tax demonstrates to prospective and erstwhile hesitant crypto investors the government’s acknowledgement of cryptocurrencies, if not yet tacit approval. This is especially significant from a government that banned cryptocurrency in 2018, with a central bank that seems like it still wants to. 

As recently as this month, Reserve Bank of India (RBI) Governor Shaktikanta Das has called cryptocurrencies a threat to stability, attacking their underlying lack of intrinsic value, calling them “not even a tulip.” However, Finance Minister Nirmala Sitharaman recently reaffirmed that the RBI and the Indian Ministry of Finance are in “complete harmony” on cryptocurrency policy.

Yet, cryptocurrencies continue to prove popular in India, and Shetty believes that another 100 million people in the country will start investing in crypto in the next two to three years. “Investors are seeing a lot of clarity and visibility now with taxation announced in the budget,” Shetty said. “Earlier, people were on the sidelines wondering if cryptos were allowed or not.”

He remarked that WazirX had also been seeing more interest from companies which had been wary of the “optics” of dealing with crypto until the government’s announcement. 

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage.

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