Budget 2022: Crypto players seek regulatory framework, tax clarity

The regulations around the Crypto and blockchain sector are one of the most anticipated for the upcoming Budget session. The previous year has witnessed numerous advancements in the space with NFTs and Metaverse gaining concrete ground and entering mainstream global markets. Big conglomerates like Facebook rebranding themselves as Meta and Nike, Pepsi, GAP, etc, introducing their own product NFTs in the Metaverse are a prelude to what more large-scale developments are awaiting in this space.

India has already been at the forefront and a major contributor to the blockchain technology and cryptocurrencies sector. Popular artists like Amitabh Bachan, A R Rahman, and more have entered this industry with their offerings as a way to capitalize on the latest trend that has gripped the market.

With the pandemic being an inadvertent catalyst in pushing the world towards a technological revolution, we have seen a number of emerging technologies showcase their potential including blockchain technology that has now expanded to DeFi, NFTs, Metaverse, dApps, etc. India has been quite active in this space, both on the technology and investment front. In November 2021, CREBACO, a crypto research and intelligence business, estimated India’s investment in cryptocurrencies to be over $10 billion.

These large-scale investments are a result of a variety of investment options that are apparent in the industry. Users can invest in digital as well as physical assets like gold and silver.

This makes regulatory clarity around cryptocurrencies the need of the hour and this Budget session can be a great kickoff for this.

Our expectations for the Budget session include -

Regulatory framework and taxation

The crypto industry is adrift with active transactions and investments happening every day but recognizing them as assets would enable quicker adoption and will enable investors to protect themselves from scams. It would further enable firms working in this sector to protect their and their users’ interests as there would be a clear protocol in place according to the Government of India defined guidelines. Furthermore, with a clear regulatory framework, there would be clarity with regard to taxation as well. Currently, there is a lot of speculation with regards to the GST applicable on the various products and services of the sector and the taxation an individual would have to pay for his/her investment. Delaying this clarity would give rise to more uncertainty and assumptions which may discourage even global names from entering the Indian markets.

Encouraging startups and other businesses

The startup space of India has grown rapidly in 2021 and it does not seem to be stopping anytime soon. Technology-driven startups in sectors such as fintech, ed-tech, healthcare tech, etc, have emerged with promising solutions and innovations. The Indian ecosystem has been quite conducive to their further growth, especially towards fintech. But, with regards to the crypto sector, the Government’s purview should go beyond just crypto exchanges. There are numerous crypto startups and firms that provide holistic financial solutions that include investing, lending, borrowing, etc, apart from trading.

Our expectations with this season would be further incentivization of the Fintech Startup ecosystem along with an increased focus on holistic crypto-based fintech solutions that need regulations to ensure their smooth functioning. India is a hub of developers and is being lauded globally for its technology offerings, thus, providing equal or more support to the development of various fintech and other startups, as compared to last year would be a great initiative by the Ministry of Finance. This could include more startup-friendly regulations, paper-less approvals, increased contribution to the Fund of Funds for Startups, among others.

Education Initiatives

India has always been active in the education sector and with the development and support provided to various ed-tech startups, we can aim to achieve the same or more in this season. The education landscape in this era of e-learning has changed and has led to the development of numerous ed-tech startups that have provided revolutionary sources to learn and educate. We hope to see more investments in creating awareness and ensuring increased financial literacy and financial instruments that are available for users to explore and experiment with.

The Budget session for 2022 is highly anticipated by nearly all crypto industry players and we hope to see positive developments coming in soon.’

(The writer is COO and Co-Founder, OroPocket-investment platform and, UniFarm-group farming solution)

Published on: Wednesday, January 26, 2022, 03:25 PM IST