India’s crypto community remains resilient despite strict taxation, with its ecosystem gaining traction but still not reaching its full potential.
Despite the government enacting “discouraging” taxes on cryptocurrency trade, the local community claims that cryptocurrency adoption has been flourishing in India.
As part of its Union Budget 2022, India, the largest market in the world regarding cryptocurrency usage, imposed a 30% tax on cryptocurrency gains and a 1% tax withheld at the source, according to Chainalysis.
According to local market experts, India’s cryptocurrency community has demonstrated resistance to stringent taxation regulations more than a year after the implementation of the “draconian” taxes in April 2022.
The country’s cryptocurrency ecosystem is growing, if not to its full potential.
India’s Crypto Market Is Considered Highly Vibrant
According to Raj Karkara, chief operating officer of ZebPay, India’s current tax system “can erode profits” and “discourages frequent trading.”
In October, the cryptocurrency exchange ZebPay, which was founded in India, commemorated its tenth anniversary.
India’s cryptocurrency ecosystem has been “thriving” despite the country’s high tax structure, Karkara told Cointelegraph, adding that numerous exchanges have led the way by providing easy-to-use fiat-to-crypto conversion platforms that facilitate easy and convenient transactions.
India is still “one of the most vibrant markets for crypto,” according to Karkara, because of the country’s youthful, tech-savvy populace and growing interest in blockchain solutions.
Crypto Is Owned By At Least 100 Million Indians
Ajay Kashyap, an Indian cryptocurrency YouTuber, shared Karkara’s viewpoint on the Indian cryptocurrency sector.
“Despite the difficulties caused by the high tax of 30%, India’s cryptocurrency ecosystem is flourishing,” Kashyap told Cointelegraph.
“With more than half of its citizens under 25, Indians are incredibly tech-savvy,” he added, adding that this group is strongly linked to active use of digital assets. This led to an expected 100 million crypto owners in India in 2024, according to Chainalysis, Kashyap noted.
“A fertile ground for cryptocurrency adoption, particularly among younger individuals, has been created by the combination of inexpensive internet, widespread smartphone usage, and growing interest in blockchain technology,” Kashyap stated.
He also mentioned the Financial Intelligence Unit’s regulatory licenses of prominent cryptocurrency exchanges like Binance and KuCoin in May as evidence of the Indian government’s growing interest in the space.
Crypto Ecosystem In India Has Yet To Reach Its Full Potential
According to Sumit Gupta, a co-founder of the CoinDCX exchange, India’s cryptocurrency ecosystem is still resilient but has not yet reached its full potential.
According to the Chainalysis Global Adoption Index, it’s not surprising that India routinely ranks among the world’s top adopters of cryptocurrencies, he added.
“For it to truly flourish, we need a comprehensive regulatory framework that addresses key issues, including the current taxation structure.”
Balaji Srihari, the business head of CoinSwitch, made a similar view, emphasizing that India’s current tax structure still discourages wider participation.
“These policies could be made much more flexible to encourage traders to participate in the market,” Srihari stated.
