It looks like India has finally defined its stance on crypto.
It’s shouldn’t have been easy though:
❌ One the one hand, crypto can be seen as a threat to the current monetary and financial system.
⭕ On the other hand, it is a fast-developing high added-value industry that can potentially change the world.
Indian rulemakers spent a good part of 2020 and 2021 oscillating between these two considerations.
Its Central Bank tried to ban crypto on two occasions, first time overruled by the Supreme Court, second one – silenced by India’s Finance Minister. The media have reported all kinds of contradictory rumours as to the future of crypto in India, witnessing how uneasy it was for regulators to find common ground.
The practical thinking of Nirmala Sitharaman, India’s Finance Minister, took over. Why indeed try to stop the unstoppable, while missing out on potentially huge tax returns?
⚖️ At today’s budget hearing she announced India’s plans on introducing a tax regime for crypto: 30% on any income resulting from crypto operations. She also spoke about the Central Bank’s intentions to launch the digital rupee, a CBDC, as soon as 2022-2023.
This does not replace a comprehensive legal framework, but indicates the government’s readiness to work on it, and that’s a good news for Indian crypto businesses (even if 30% tax may look like too much for some).
Regulatory uncertainty surrounding crypto is a threat for the industry, no doubt. However, one country’s ban can become another country’s opportunity, and as much as Central Banks would like to keep their grasp on the people’s lives, other government bodies must realize that letting crypto in the house can open an additional source of tax revenue and even propel the country to the forefront of innovation.
And that’s tempting for any country.