Crypto: An Epic Tale Of Highs And Lows

While the entire world is capitalizing on the trend of cryptocurrencies and assets, India is facing headwinds in the crypto sector. The crypto boom in the midst of the pandemic was unprecedented. However, the Union Budget of 2022 announced the 30 per cent tax on profits made on a crypto transaction that started the snowballing effect. Additionally, the Union government also levied one per cent TDS (tax deducted at source) on all crypto transactions.

-  Saptak Bardhan

Crypto being a prospective sunrise sector is languishing at the bottom of the pile due to the heavy tax impositions. Subsequently, the crypto sector has lost a total of INR 32,000 crore in trading volume between February and October last year, moving to foreign exchanges, according to a Delhi-based think tank Esya Centre. The report suggests the existing tax architecture may result in a loss of approximately INR 99.3 trillion of local exchange trade volume over the next four years.

The trading volume dropped by 90 per cent in the first week of imposition of the taxes. Other jurisdictions have capitalised of the downfall of crypto in India wherein more liberal jurisdictions have been successful in luring away India's top Web3 talent.

"The key to success during a crypto market downturn is to remain focused on long-term goals and agile in the face of changing market conditions. By taking a strategic and proactive approach, startups can position themselves for success in the long run," said Punit Agarwal, founder, KoinX.