Cryptocurrency, a digital asset class secured through cryptography, has rapidly progressed from a tech experiment to a trillion-dollar industry globally. Despite its increasing popularity, crypto remains largely enigmatic in India, with questions surrounding its legality, taxation, and adoption compared to other countries.
The introduction of Bitcoin in 2009 marked the birth of the crypto market, which has since diversified to include thousands of digital assets, such as Ethereum and stablecoins. These digital currencies operate on decentralised blockchain networks, which provide transparency and security and eliminate the need for intermediaries. However, this lack of a centralized authority also creates challenges related to regulatory oversight.
In India, investing in crypto is legal, but the legal landscape is complex. The government has adopted a regulatory approach, with the Ministry of Economic Affairs currently drafting a concept paper to define the scope and utility of crypto assets within the Indian framework. The IT Bill, presented earlier this year, formally recognises crypto as a virtual digital asset, which is viewed as a step towards bringing crypto into India’s financial ecosystem.
In 2022, the Indian government announced a specific taxation policy for crypto transactions. Profits from crypto assets are taxed at 30%, and a 1% tax is deducted at the source for crypto assets sold exceeding ₹50,000 within a financial year. However, losses from crypto trading cannot be offset against other assets or losses.
Internationally, countries like the US, EU, UAE, Singapore, Japan, and South Korea have embraced crypto by implementing comprehensive regulations. These nations are considered as leaders of the next wave of digital economic growth. For Indian investors, participation in this digital asset class entails careful selection of a trustworthy crypto exchange and adherence to the evolving regulatory landscape.
