India’s cryptocurrency industry needs greater regulatory clarity and a tax framework that accounts for the way digital assets are traded and used, cryptocurrency experts said at the Business Standard BFSI Insight Summit on Tuesday. At the session titled Taxed but Not Trusted: Can India Regulate an Asset It Doesn’t Recognise?, the panelists discussed sector challenges, changing investor behaviour and opportunities such as tokenisation. Vandana Ahuja, partner, EY India, said taxation of digital assets was clearer, but some aspects still troubled traders.
She acknowledged the burden of the 1 per cent TDS, particularly for frequent traders, where the deducted tax could be disproportionate to profits. She said the industry needed to raise these concerns with the government, even as tax authorities gained more transaction information through data-sharing arrangements and exchanges of information with other countries. Vikaas Sachdeva, CEO of BitDelta India, said India’s digital-first approach made it a significant market, but cautioned against relying only on headline adoption figures. “Adoption is not a problem.
The interesting thing is that a lot of this money is coming from tier-II and III and IV towns, it is coming despite the 30 per cent tax and 1 per cent TDS. The moment 1 per cent TDS was introduced 81 per cent of the business for the leading exchanges just dropped. It was not that people stopped trading, it was that the business moved overseas,” he added. S B Seker, head of Asia-Pacific at Binance, said the regulation discussion had changed little despite India’s substantial user base.
He suggested that market demand was moving ahead
He suggested that market demand was moving ahead of policy, while exchanges were developing tools to help regulators address fraud prevention and transparency concerns. Vimal Sagar Tiwari, cofounder of CoinSwitch, highlighted India’s technology adoption and ease of onboarding. “India is a very important market in terms of investment in the crypto market,” Tiwari said.
He said platforms were exploring new products and business models, and that education remained important. Panellists also discussed tokenisation, which uses blockchain technology to represent assets digitally and could expand the financial products available to investors. Tiwari called it an important blockchain use case, with potential to make real-world assets programmable.
“The real-world use cases, the UPI movement of tokenisation, still have to arrive,” he said. Sachdeva said the sector was becoming more layered, with trading being only one part of the ecosystem. Tiwari said customer protection should not come at the cost of innovation. Seker said exchanges were already using technology to support fraud prevention and provide tools for regulators.
