Will Cryptocurrency Emerge As A Dominant Financial Instrument In India?

India has been a leader in the development of Web 3.0 and blockchain technology, and is working hard to ensure digital inclusion across all demographics as the fourth industrial revolution takes hold. The trading and use of cryptocurrencies and other crypto assets are one of the major applications of blockchain technology. A substantial number of Indians have already embraced the crypto ecosystem, despite the massive challenges that the industry is facing.

Cryptocurrency is heavily taxed in India at 30% (in addition to other taxes and cess), and is treated as an asset class, which has discouraged Indian traders from using domestic trading platforms. Due to these taxes, the cryptocurrency trading has become unprofitable in India, resulting in traders looking for overseas cryptocurrency exchange platforms. Transactions involving digital currencies are now regulated by the Prevention of Money Laundering Act (PMLA). The government has imposed TDS on cryptocurrency as well. Upon being included in the PMLA, cryptocurrency exchanges and Virtual Digital Assets (VDA) service providers were transformed into reporting agencies. They are now obliged to keep records of cryptocurrency investors.

Vikram Subburaj, the co-founder and CEO of Giottus Crypto Platform, believes that these government initiatives are a positive development for the cryptocurrency sector and its investors. According to him, by establishing rules and regulations for the cryptocurrency industry, investors’ interests would be better protected and transparency would be increased. The Government of India has only one message – invest in cryptocurrencies responsibly and report your profits. Crypto, as some experts believe, has the potential to revolutionize the investment environment.

Cryptocurrency has the potential to have a major impact on the Indian economy. If more people invest in it, transactions will become easier and settlements will be completed faster. These features will promote ownership of assets that is not centralized. For this reason, companies are looking to take part in the growth and development of the Web 3.0 and crypto environment.

The government is exploring the use of the E-Rupee or Central Bank Digital Currency (CBDC), which was introduced by the Reserve Bank of India, as a way to enter the Web 3.0 ecosystem. The CBDC trial experiment, which is being held in four cities, Mumbai, New Delhi, Bangalore and Bhubaneswar, has already had over 50,000 retail participants. Through partner banks’ mobile digital wallets, CBDC customers can conduct transactions in e-Rupee. The experimental initiative has been used by 8 lakh people thus far.

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