The Indian government is adding new elements to the confusing situation surrounding cryptocurrencies by introducing requirements for platforms serving users in the country while still lacking clear legislation on crypto assets.
Regulatory Uncertainty
In India, cryptocurrency assets lack clear legal regulation. Minister of Finance Pankaj Chaudhary stated that they are currently unregulated, and hence the question of the legality of specific platforms does not arise. However, all virtual asset operators must register with the Financial Intelligence Unit (FIU) to comply with the Prevention of Money Laundering Act (PMLA).
High Taxes on Crypto Trading
Crypto traders in India are facing significant tax burdens. Profits are taxed at a flat 30%, with no exceptions or deductions. Additionally, a 1% Tax Deducted at Source (TDS) applies to every single trade. Traders must also consider the Goods and Services Tax (GST) on trading fees, which further reduces profit margins.
Demands for Transparency and Security
Users of cryptocurrency exchanges continue to face issues such as withdrawal delays and poor customer support. This is happening against the backdrop of recent serious hacks on platforms like WazirX and CoinDCX, resulting in millions of dollars in losses.
Despite a lack of clear regulation, registration requirements for cryptocurrency operators maintain unease among traders. Security issues and high taxes complicate the situation; however, initiatives like the COINS Act may provide a foundation for future regulation.
