Crypto success

Crypto success

Updated on: Jun 23, 2022

The government has done well to curb speculative trading in cryptos | Photo
Credit: gopixa

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High taxes have checked speculation in cryptocurrency• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта in India. Now, global
regulators should act in tandem

The Centre’s move to tackle speculation in the highly volatile and risky
cryptocurrencies• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта through the imposition of punitive taxes came in for much
criticism from investors but it has actually helped protect them. The global
sell-off in risky assets caused by central bank• Экономика » Финансы » Государственный банк » Центральные банки tightening has resulted in a
sharp decline in the prices of cryptocurrencies• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта in the last few weeks.
Bitcoin• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта » Bitcoin, the most popular cryptocurrency• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта recently moved below $20,000 to
register a loss of 70 per cent from the peak value last November while the
global market capitalisation of cryptocurrencies• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта has declined from $2.5
trillion towards the end of last year to around $800 billion. But the loss
suffered by investors trading in these assets on Indian trading platforms
would be minimal since trading volume had dropped almost 60 per cent this
year. This decline in trading activity is a direct fallout of the Centre’s
action in the Union Budget this year wherein it had imposed 30 per cent tax on
transfer of all virtual digital assets including cryptocurrencies• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта, disallowed
deductions and set offs while calculating the profit and had imposed a TDS of
1 per cent on transfer of these assets. With the TDS on cryptocurrency• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта
transfers coming into effect from July 1, activity on these platforms is
likely to decline further. A recent CBDT notification has specified that the
onus will be on the exchanges to collect and deposit• Экономика » Финансы » Инвестиции » Вклад the TDS and submit
periodic reports to the tax authorities. This will further discourage
activities in this segment.

The proliferation of usage of digital technology in payment, investment• Экономика » Финансы » Инвестиции and
other financial transactions has created unique challenges for regulators
since many of these companies originate and grow in a regulatory vacuum.
Regulators typically tend to be one step behind in framing laws for these
digital products. Controlling cryptocurrencies• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта and virtual digital assets has
proved even more difficult since the creation and trading of these assets
takes place outside the country, beyond the reach of regulators. But there was
an urgent need to control speculative trading in cryptocurrencies• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта in India
last year with many investors getting lured into dabbling in these assets due
to the 10-fold increase in their value during the pandemic. India did well to
control this speculation through fiscal measures, even as most other countries
are still deliberating on it.

Speculative trading in cryptocurrencies• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта is however, just one of the regulatory
challenges. The other problem – use of these assets for illegal payment
transactions involving money laundering, drug-trafficking and terror financing
– still continues. The Enforcement Directorate has unearthed many such illicit
transactions violating FEMA on Indian crypto-trading platforms. While the
Reserve Bank of India• Объект организация » Организации по алфавиту » Организации на Ре » Резервный банк Индии has repeatedly expressed its reservations about allowing
these currencies to be held and circulated in the country, it is tough to
control them through a unilateral ban in India. It is only through concerted
cross-border collaboration and cooperation that the destabilising effect of
these assets in the global payment ecosystem can be addressed. A global
standard needs to be framed for payments using cryptocurrencies• Экономика » Финансы » Платежные средства » Платежные системы интернета » Криптовалюта, with
companies enabling these transactions mandated to be registered with the local
central bank• Экономика » Финансы » Государственный банк » Центральные банки and being supervised by it. A parallel payment system, which is
completely unregulated cannot be allowed to exist.

Published on June 23, 2022