Business News/ Markets / Cryptocurrency/  Over 115 mn Indians have invested in cryptos: Survey

New Delhi: Over 115 million Indians have invested in cryptocurrencies in the country so far, said an industry estimate by Seychelles-based cryptocurrency exchange, KuCoin. By 2030, the total value of investments in cryptocurrencies from India will cross $241 million (about 1,900 crore), said the survey, published on Tuesday.

Cryptocurrency investments in India have taken a hit, ever since the union government announced a 30% capital gains tax for all profits made through trading cryptocurrency tokens. The tax rate, which came into effect from 1 April, is applicable even if an individual’s earnings from crypto trades, which is classified as ‘virtual digital assets’, is below the non-taxed threshold of 2.5 lakh in earnings per year.

Subsequently, Indian users still trading cryptocurrencies also face a 1% tax deducted at source (TDS) rate for any crypto token purchases, made on centralized crypto exchanges such as WazirX and CoinDCX, among others, above 10,000.

Ever since the new tax regimes on crypto trading came into place, trading volumes on popular Indian exchanges took a clear dip. According to data from cryptocurrency market research firm Crebaco Global, the daily average trading volume on WazirX dipped by 48% sequentially — down from $47.18 million in March this year, to $24.39 million in April.

On CoinDCX, the daily average trading volume dropped 28% sequentially from $13.11 million in March to $9.38 million in April.

Trading volumes took an even bigger hit once the TDS rule on crypto trading came into effect from 1 July. On WazirX and CoinDCX, the daily average trading volumes dipped by 71% and 77% respectively, down from $9.68 million per day in June to $2.81 million on WazirX in July, and $7.79 million per day to $1.82 million on CoinDCX in the same period.

KuCoin’s survey data, extrapolated from a sample size of just over 2,000 individuals, somewhat reflect this as well. While 67% of all crypto investors in India were willing to make more investments in crypto tokens in the December quarter of 2021, the figure took a dip of around 20% as of June quarter.

About a third of all crypto investors are also concerned about government regulations in cryptocurrencies, which are holding back their investments, KuCoin’s survey further added.

On 23 August, Mint reported that active crypto investors in the country are migrating their investments to global exchanges, such as Binance, US-based Kraken and KuCoin itself, to side-step the TDS regulation on crypto trades. While India mandates the tax deduction, the regulation does not specify if it is applicable only on Indian exchanges, or on global platforms as well.

Investments made through global exchanges, however, have raised concerns regarding the prospect of money laundering through such platforms. These concerns were heightened with a crackdown on Indian cryptocurrency platforms by the Ministry of Finance’s law enforcement agency, Enforcement Directorate.

The key concern, according to industry experts, is the lack of know-your-customer (KYC) data and traceable information on global platforms, although global exchanges have maintained that they remain compliant with all requisite laws of the land to offer their services to Indian users.

India remains a lucrative market for cryptocurrency exchanges. A report from 5 April by crypto exchange Gemini said that Indians are the highest first-time adopters of cryptocurrencies in the world, with over half of all first-time crypto investors in the world originating from India at the time.

Shouvik Das
Shouvik Das is a science, space and technology reporter for Mint and TechCircle. In his previous stints, he worked at publications such as CNN-News18 and Outlook Business. He has also reported on consumer technology and the automobile sector.
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Updated: 23 Aug 2022, 03:57 PM IST
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