Crypto tax may lead to brain drain, impact trading: CoinDCX CEO Sumit Gupta

The various provisions under the new cryptocurrency tax law, which was introduced by the government during the Budget 2022, could lead to brain drain from the country and move the trading activity from the homegrown exchanges to global platforms,  Sumit Gupta, the CEO and co-founder of cryptocurrency exchange, CoinDCX, said on Tuesday.

 
Gupta, while speaking at the fireside chat themed “Cryptos: Asset or Liability?” at the Business Today Crypto Conclave, said that the “onerous tax provisions will not be good for the industry and can have serious consequences including turning away both the investors and developers away to other countries."
 
While responding to a question from Business Today Editor, Sourav Majmudar, Gupta argued that provisions including 1 per cent tax deductible at the source (TDS), and even the recent clarifications from the government, could be disastrous for this nascent sector and prevent further innovations from developing within the country.

“If you look at the countries like Dubai, Thailand, they are in the process of becoming the crypto hubs because of the positive regulations and attracting a lot of investments as well as talent from the world over. India, on the other hand, is a technology powerhouse and we should be able to harness this potential to build applications on blockchain technology if we have a favourable regulatory environment. Under the current tax provisions, the trading volumes ae expected to dry up ,” Gupta added.
 
Neeraj Khandelwal, co-founder, CoinDCX, while drawing an analogy of the cryptocurrency development with the evolution of the Internet, said that the technology development is happening with advancement in decentralisation as was the case when world moved from wired telecommunications to the Internet age.
 
“There are side-effects to every technology disruption, but we must focus on the positives and shouldn’t shut the technology as a whole which would put the country’s economy behind.The crypto exchanges are working on various concerns like for instance, illegal transactions which is now limited to 0.15 per cent from more than 3 per cent in 2019 as a result of more compliances and tracing tools exchanges have in place now,” Khandelwal said.
 
On the question of the volatility of crypto assets, Gupta said that with increasing participation of large institutional investors in the industry, and increasing market capitalisation, the volaitilty of the digital assets will go down and these will become more predictable in nature.

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