All the three cryptocurrencies saw a spurt in volumes across Indian exchanges in the last few weeks and registered a high on Thursday and early Friday, say industry trackers.
“The trading volumes in terms of quantity have increased for Bitcoin and Ether as there have been some price corrections. Our platform attracts infrequent traders and holders. It has stood true during correction times as well,” said Sathvik Vishwanath, Co-founder and CEO Unocoin, a cryptocurrency exchange.
“We saw an expected shift in investor behaviour from riskier cryptos to the blue chips of the industry. The past month can be akin to a bear market. And bear markets truly separate the settlers from tourists. However, the ones who had recently joined the crypto investing journey seemed to be stirred,” said Edul Patel, CEO and Co-founder of Mudrex, a cryptocurrency exchange.
Large cryptocurrencies have seen a constant decline in the last one week over volatility concerns.
“Majority of investors are holding on to their earlier positions and there has been an exceptional growth in users who have opted to buy the dip,” said Shivam Thakral, CEO of BuyUcoin, a cryptocurrency exchange.
Many investors fear that the government could bring tax regulations around cryptocurrencies and that could only wipe out remaining gains.
The government was planning to define cryptocurrencies as a commodity in the new draft bill that also proposes to compartmentalise virtual currencies on the basis of their use cases.
“There is no preparation for the bill; the government is waiting for the US policies to take shape which are expected in the next 2-3 months. After the US releases its policies on crypto, India is expected to decide its way forward,” one of the persons close to the development said.
Currently, there is no clarity either on direct tax or indirect tax when it comes to cryptocurrencies. This is mainly because it’s not defined either as currency, asset, commodity or service.
Also, there is no clarity as to whether gains from cryptocurrencies should be treated as capital gains or business income. Capital gains – long term capital gains and short term capital gains — attract lower tax rates depending on the asset.
This change is set to come along with another set to target crypto investors.
The government is looking to amend current income tax and disclosure norms in the upcoming budget to include “cryptocurrency,” ET first reported on December 4.
The government wants to capture cryptocurrency income and investments within and outside India, two people aware of the development said.
The government will amend section 26A of the income tax act or annual information regulation (AIR). The AIR tends to throw up data on all investments made by a taxpayer and is often called a “tax passbook.”
Industry trackers say that once such an amendment is made in the income tax act, the tax department can seek a detailed list of transactions done by individuals through banking channels.
The government is also looking to amend foreign asset disclosure norms, whereby Indians will have to disclose if they hold cryptocurrencies outside India, ET reported.
