Cryptocurrency News: Tax on digital assets, Budget 2022 restores hope in crypto

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It’s most likely the first time an industry has applauded the implementation of a hefty tax on the asset class in which it trades. Investors and entrepreneurs in the virtual digital assets and cryptocurrency ecosystem praised Finance Minister Nirmala Sitharaman’s decision to tax “any revenue from transfer of any virtual digital asset” at 30%, calling it a step toward “mainstreaming enthusiasm” about the asset class.

The Indian crypto community is ecstatic following the government’s declaration in the Budget 2022 of a 30% tax on digital assets.

The news is a breath of fresh air since it appears to be setting the stage for improved cryptocurrency laws in the future. Indian crypto executives have applauded the government’s move, especially given the lack of regulation has made it a divisive issue.

Cryptocurrency investors and coin exchanges feel that the government’s decision to tax them gave clarification and the first step toward eventually legitimizing this asset class.

Singhal is also the Blockchain and Crypto Assets Council co-chair, a cryptocurrency startup industry association founded under the Internet and Mobile Association of India.

Despite Sitharaman’s statement that the decision to tax should not be seen as a step toward legitimizing the asset class, the industry remains optimistic. In a post-budget interview, the Finance Minister stated that she could not regulate or formalize a framework for regulating cryptocurrencies or other virtual digital assets.

The industry also appreciated the government’s decision to develop its digital rupee, which it believed would familiarise both investors and non-investors with virtual currency while also “creating an appetite” for the asset class.

Aside from the Finance Minister’s warning, the government has yet to introduce The Cryptocurrency and Regulation of Official Digital Currency Bill. It was scheduled for introduction at the previous winter session of Parliament, with the goal of “creating a facilitative framework for the development of the official digital currency to be issued by the RBI.” Its purpose was to “prohibit any private cryptocurrencies” while allowing “limited exceptions to promote the underlying technology.”

Despite this, cryptocurrency coin exchanges and other experts believe the taxing action is “a welcome step as it legitimises crypto and indicates to an optimistic mindset towards wider adoption of crypto and NFTs (non-fungible tokens) among stakeholders in the country.”