Why India Blows Hot and Cold in Dealing With Crypto

Until this year, India was one of the fastest-growing markets for crypto assets. Then in April the government began to tax crypto transactions and volumes on local exchanges collapsed. The government presented the tax move as an opportunity to formalize the asset class. It also made crypto trading prohibitively expensive. The decision comes amid a drumbeat of criticism of the industry by government officials and regulators. Some of the most withering attacks have come from India’s central bank as it prepares to launch a national digital currency that’s a potential competitor to crypto tokens such as Bitcoin and Ether.

Since April 1, any gains on the transfer of crypto assets are taxed at 30%, a higher rate than in many other jurisdictions including the US and the UK. Trading losses can’t be offset against income, even from a different token. In July, the government added a further 1% tax -- to be deducted at source -- on digital-asset transfers worth over 10,000 rupees ($125) or on a combined 50,000 rupees of transactions over a single financial year.