Cryptocurrency Market Post Budget 2023

With unprecedented growth and buzz among global investors, cryptocurrency is undoubtedly one of the most talked-about topics. Its rapid growth compelled investors and non-investors to participate in the crypto debate. Amid contrasting opinions on the reliability of this digital currency, Indian investors took a keen interest in the recent budget allocation to see the government’s take on the much-hyped digital asset. 

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Budget 2022 allocation shed light on the government’s stance on crypto, and its value for Indian investors as global crypto investments and transactions are experiencing an all-time high with its prominence. The Union Budget showcased various vital points about digital currency, how people can use it in India, and the related taxes levied on it through frequent transactions. These decisions are most likely to impact India’s developing cryptocurrency market significantly. The recent budget decisions reflect an effort to fuel digitisation in India, and crypto investors are here for it!

Let’s find out what the budget comprises and how it will affect the market!

Union Budget 2022: Government’s take on the Digital Asset

Perceiving growth possibilities and increased interest from Indian investors in cryptocurrencies, the Union Budget 2022 offered a clear stance on the crypto wave, providing the much-needed exposition on digital currency. The Finance minister narrated several provisions under active crypto transactions in the country. 

Here are the significant guidelines and regulations that users must follow for crypto transactions:

• The union budget has announced the application of a 30% tax on the exchange of all digital assets, including cryptocurrencies and non-fungible tokens (NFTs). 
• Crypto has been added to the VDA (Virtual Digital Assets) to be included in the taxation process. 
• Shedding more light on the taxation model of digital assets, The Finance Minister clarified virtual currencies have a restricted monetary threshold and transactions exceeding it will be required to pay 1% TDS. 
• Virtual currencies offered as gifts will also be levied taxes, and the recipient will be liable to bear deductions.
• The Reserve Bank of India would soon roll out its virtual currency called the Digital Rupee by 2022-23 to keep digital assets monitored by the government. 
• No set-off of losses faced through crypto investments would be allowed through other income sources. Also, any such loss shall not be allowed to carry forward to succeeding assessment years. 

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Is Crypto Legal?

The government’s current stance on crypto assets has extended clarity to many conflicted investors. While the current processed tax regulations and rules imply crypto’s legitimacy under the government’s framework, its legal stance is still conflicted. 

With the Reserve Bank of India launching a digital currency soon, the government aims to regulate digital currency, which does not apply to global cryptocurrency. The attempt extends the government’s acceptance of the virtual currency but with significant control of the authorities. 

Following the yes or no situation of crypto’s legality in India, is it safe to say that crypto is not illegal in India but also not legally accepted under an official statement. The ambiguity persists, but revised taxation offers hope for investors to look forward to crypto legalisation in the coming years.

What’s in store for Indian crypto investors now?

Although there are no official data, estimations claim the number of crypto investors in India lies around 15 to 20 million people, constituting the biggest majority of global crypto investors. Post budget crypto market is relieved to witness taxation laws as a step towards legitimising the currency entirely. However, the applicable tax on crypto transactions continues to be a matter of concern. 

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The aim to regulate virtual currency prepared the government to roll out their currency structured on Blockchain. As a result, the Blockchain sector is expected to surge drastically. The industry also estimated a rise of new investors, compelled to join the crypt forces now, after the government has shown no sign of banning it. 

The best change the crypto market will experience is a rise in well-informed investors. As the government has applied heavy taxes on crypto transactions, people are starting to work through Blockchain technology and learn its intricacies. Cryptocurrency and Blockchain are also included in the academic curriculum to raise awareness of these upcoming technology giants. 

Introduction of Central Bank Digital Currency 

Offering a boost to the cryptocurrency market and Indian investors, the Reserve Bank of India is set to launch CBDCs or Central Bank Digital Currency. These currencies are the same as crypto and developed using Blockchain technology, though there is a big difference between Indian CBDCs and foreign crypto assets. The crypto rolled out will carry all characteristics of a fiat currency and will be entirely regulated by the officiating government. 

Initially, cryptocurrency’s legitimacy was conflicted from an official perspective, though its goals align with India’s digitisation model, and authorities perceived it as an opportunity to incorporate the globally acclaimed technology into the Indian market. Pre-existing decentralised cryptos can steal currency control from the government. Therefore, the RBI decided to roll out its own currency called the Digital Rupee, which authorities will regulate.

RBI’s digital currency is aimed to fuel the digital economy through an efficient and cheaper currency management system. Experts estimate the taxation regulations to be the same for the upcoming CBDCs. Still, major other reformations are on their way to stabilise the implementation and management process of the digital currency. 

Cyber Security Concerns 

Technological advancements fuel black hat entities to benefit and implement their malicious plans. However, the Indian cryptocurrency market will prepare itself with sophisticated cyber security instruments. 

Cyber security is one of the biggest concerns of digital processes, and its evolution through tech improvements has also helped it achieve impossible feats. Being a highly encrypted service, crypto has several security concerns still surrounding its application. Hence, the crypto market is likely to strengthen its security line for better opportunities. 

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Conclusion

The cryptocurrency market post budget is both relieved and conflicted. Its acceptance and flat taxation charges create doubt among Indian investors, but the onset of India’s own CBDCs offers a ray of hope to investors. For now, the majority is relieved to gain acceptance by the government, but the Blockchain and crypto sector has a long way to go to attract more investors and expand more in the coming years!

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