April could be a decisive month for cryptocurrencies in India as income from the transfer of any virtual digital asset will be taxed at the rate of 30 percent beginning April 1. From investors to crypto exchange founders, everyone is waiting to see how the proposal put forward in the Budget 2022 plays out.
WazirX CEO and co-founder Nischal Shetty has said March has been a good month for cryptos but the impact of the new tax will only be apparent half-way through April.
In a Tokenomics chat on CNBC-TV18 on March 29, the chief of India’s leading crypto exchange shared his outlook for digital currencies in March and what lies ahead after the government confirmed its tax stand on virtual digital assets. Here are the highlights of Shetty's conversation:
Outlook in March and expectations for April
Shetty noted that cryptos have had “a lot of ups and downs” in 2022.
“Not only specific to India only but on a global level where January and February we still saw the markets go lower. Surprisingly in March, crypto has slowly and steadily picked up—bitcoin price is increasing, the market cap now back to the over $2 trillion range and it is holding up and at least in the last few days it has held up well,” he said.
Shetty added that volumes in India have gone up, with March seeing at least 20-30 percent higher volumes compared to February.
“Having said that, globally we are going still stronger. We now have to see how the India story plays out. I think a couple of weeks into April it will be more clearer whether this (crypto taxes) will impact the industry or whether people will still trade and not worry too much about the changes,” he added.
Despite ups and downs, has international acceptance still been strong?
Shetty was emphatic that metrics—the recent rise of bitcoin and 40-50 percent upside in some tokens—are great in a traditional market sense. However, he added, “When I say slower, I mean in crypto terms.”
The WazirX founder said he was excited about the adoption of cryptos worldwide. “I think the key factor is adoption. Adoption is a key indicator of the strength of an ecosystem or a market, and that is constantly growing. While prices can sway based on user sentiment and daily news, you do not see a reversal in adoption,” he said.
He pointed out, “No large or small institute that has adopted crypto came back to say ‘no our decision to get into crypto was wrong’ or ‘we are not letting go of this’ or ‘we are not entering (the sector)’.”
He, too, referred to the dot-com bust analogy to back his point. “Everyone is entering crypto. It is a lot like the website (rush). But when the dot-com bubble burst in 2000, companies did not stop creating websites. Adoption has always been upwards for internet and I think the same philosophy is playing out for crypto—where the adoption is not stopping, be it countries, be it Facebook changing their name to Meta, be it central banks around the world talking about CBDC. This is the greatest and best sign that the crypto industry is rapidly growing and it is here to stay,” he added.
Watch the interview here