Cryptocurrency: Breaking down complexities of currency of future

The exponential growth of the cryptocurrency was just a myth until Finance Minister Nirmala Sitharaman announced that 30 percent on every single penny earned via crypto would be taxed.

The Union Budget 2022-23 further announced that 1 percent of tax deduction at source (TDS) would also be charged beyond the threshold limit.

The government of India would also be launching its very own digital currency in the near future regularized by the Reserve Bank. The Central Bank Digital Currency (CBDC) would be backed-up by the chain of technologies and would further substantiate its credibility. Albeit the transparency of the transactions and recording would remain a significant factor, however, the traders wouldn’t be allowed to revise ROR modify any records to the authentication of the currency, cited Union Budget 2022-23.

The tax imposition on crypto has further established the outlook of the central government by recognizing crypto as an asset.

In India, more than 15 million share traders are accountable for 15-20 percent tax on dividends. From bans to regularisation, India seems to be on the verge of experimenting and exploring new ways to reach milestones with its financial growth.

With more than 17,000 options of cryptocurrencies for investors, it holds a total of 1.7 trillion worth as of January 2022. Some of the topmost digital currencies that are traded publicly are cryptocurrency, Ethereum, Tether and Dogecoin, and more.

With India’s very own crypto, we aim to disrupt the digital currency market in India by 2023. This could also be a step towards prohibiting private cryptocurrency in India. The currency would be backed by the states enabling users to perform domestic and cross borders transactions without any third-party approvals.

India is not the first country to launch its own digital currency. eNaira, a Nigerian digital currency has already paved its way towards the East Caribbean and extended states.

Is it logical to invest despite a tax of 30 percent?

While it is completely an investor's choice to invest in the digital currency ecosystem. However, the tax implication gives a clear-cut vision of the govt. of approving and making it an authorized investment. The further development and govt. guidelines will be a corroborative factor to the same.

For the new investors, it is indeed an apprehension but considering the market position and history of the crypto could be a great way to begin their investment. For the existing investors, there shouldn’t be any change in the strategy to invest in till further guidelines and policies are officially launched by the government.

Regularizing the crypto in India will indeed ensure the interest of investors. The government is trying to make this digital ecosystem a safe environment for investors and the country.

Crypto is a virtual currency that is a collection of binary data distributed online based on demand and supply. The regulatory authority will ensure price volatility, reduce technical complexities, and will create more awareness and education for the investors. It will furthermore make it secure and prevents online frauds and cyber attacks. The regulatory board will also have the ability to control money laundering via keeping a track of identities and verifications

Why is digital currency a good investment?

The new-age investment avenue is demanding and attracting investment from young investors. Despite the high resilience, uncertainty, and regulators it makes it an unfavorable yet prominent investment. The digital currency will add a certain amount of discipline to the Indian financial structure making it more secure. The investors can buy the online currency and store it in a digital wallet, keeping it secured with a key and historical trend of transactions. It is indeed the Currency of the Future.

The confirmed policy and guidelines are yet to be issued by the govt. of India. The most awaited bill on digital currencies will lay down certain facts and affirmation yielding it with larger investment and making it go cartwheel for the Indian market. Investing in anything new is fearful, however, if your investment appetite can handle certain swings, cryptocurrency might be the perfect choice for you to start your Investment Games.

(The author is Founder and CEO, The Investrology. Views are personal)

Published on: Saturday, February 26, 2022, 06:53 PM IST