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Why the Indian government's "concerns" about crypto are arbitrary and against human rights.

By Vladan Lausevic | CryptoVlad | 8 Mar 2023


The Indian government has taken a negative stance on cryptocurrencies due to arbitrary "concerns" over potential associated risks, such as money laundering, tax evasion, fraud, and illicit activities. Additionally, the lack of a regulatory framework for cryptocurrencies in India has been a cause for concern, as it leaves investors and consumers vulnerable to potential scams and market volatility. Also, the current Hindu-nationalist government in India is generally against freedom, human rights, democracy and decentralization.

For example, in April 2018, India's central bank, the Reserve Bank of India (RBI), issued a circular banning regulated financial institutions from dealing with individuals or businesses involved in cryptocurrency transactions. This ban was challenged by the Supreme Court of India, which lifted the ban in March 2020, stating that the RBI's circular was unconstitutional.

However, the Indian government is still considering introducing legislation to regulate cryptocurrencies in a repressive and authoritarian way. Furthermore, the Indian government has also expressed concerns over the potential impact of cryptocurrencies on the stability of the country's financial system and their potential to undermine the Indian rupee. The government has also stated that cryptocurrencies are not legal tender in India and do not recognize them.

At the moment, Indian cryptocurrency trading platforms are being forced to close down or relocate to other countries following the Indian government's decision to tax all income from crypto and virtual digital assets at 30% since April 2022, with an additional 1% charged as tax deducted at source (TDS) for every transaction over 10,000 rupees ($121).

Trading volumes across Indian cryptocurrency exchanges have fallen by around 70% since this tax regime was announced. Due to the new tax policy, cryptocurrency trade in India is shifting to offshore platforms. Investors are using the Liberalised Remittance Scheme to invest offshore in countries such as Singapore and Dubai, where they can avoid such large taxes.

There is also a development of central bank digital currency (CBDC), the digital rupee, that, according to RBI, will serve as an alternative to cryptocurrencies while possessing the features of physical currency, including anonymity. The RBI Executive Director Ajay Kumar Choudhary said that the CBDC's offline functionality is being explored and will soon become a medium of exchange in India.

The digital rupee has over 50,000 users, with over 5,000 merchants accepting it. This is a very small number considering India's population is around 1,3 billion. The RBI has previously advocated a complete ban on cryptocurrencies such as bitcoin and ether, warning that they pose a significant risk to India's financial stability, monetary system, and cyber security.

Long-term capital gains should be aimed for, as this can reduce tax liability. Getting indirect exposure to cryptocurrencies is another way to lower crypto taxes. Investing in stablecoins could be a smart move. The Reserve Bank of India is exploring the offline functionality of the digital rupee. It aims to make it a medium of exchange.

Millions of Indians have invested in cryptocurrencies, particularly Bitcoin, which has rapidly increased in value. The Indian government has noticed this and has implemented taxation strategies to control cryptocurrencies, imposing taxes on all stripes. The cryptocurrency community in India is working hard to discover ways to avoid this severe financial crackdown on their earnings.

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Vladan Lausevic
Vladan Lausevic

My name is Vladan Lausevic and I am based in Stockholm as a social entrepreneur. Here, you will find more information about my works and projects in different areas as democracy, media and technology. For more details, please contact me via [email protected]


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