In the latest news, the Indian government has passed the bill on cryptocurrency, the Reserve Bank of India will roll out its digital currency in the year starting April 1, Finance Minister Nirmala Sitharaman said in her budget speech on Tuesday. The country also intends to tax the income from the transfer of virtual assets at 30%, she stated, effectively eliminating uncertainties about the legal status of such transactions.
Indian Government Passes the Bill on Cryptocurrency
Moreover, the passing of the bill on cryptocurrency has made India join countries including China in moving forward with digital versions of their currencies as they look to employ the latest technologies to make transactions more effective. At the same time, the steep tax rate on crypto could disrupt trades that have been soaring in India despite the central bank’s warnings against the risks of money laundering, terrorist financing, and value volatility.
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“Imposing the tax rate makes cryptocurrency trading official now and any concern of a ban is off the table,” said Darshan Bathija, co-founder and chief executive officer of Vauld, a cryptocurrency exchange platform established in Singapore. Still, the supposed high tax rate could facilitate traders to shift to platforms in other countries, which would decrease revenue for the Indian government, he continued.
Furthermore, Bitcoin surged more than 2% from the day’s low after the taxation announcement. So far India doesn’t have any law regulating trading in virtual coins, though it had imposed a ban early last year. That didn’t deter millions of Indians from jumping on to the wave of global demand for virtual assets. The local market boosted 641% in the year through June 2021, according to an October report from Chainalysis, an industry research firm.
Legalizing Crypto Can Reduce India’s High Dependency on Cash
“There’s been a phenomenal increase in a transaction in virtual digital assets,” Sitharaman said. “The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.” The finance minister said the launch of a digital rupee will usher in cheaper, more efficient currency management. The Reserve Bank of India has been working on a phased implementation strategy, which could reduce the nation’s high dependency on cash.