Last week, the Indian government announced that it plans to begin taxing cryptocurrency income at 30%, a major move which would lurch the country towards legalization and regulation. It also plans to roll out the digital rupee, a CBDC, by April 2023. This is a major move away from statements by Narendra Modi, which leaned towards outright bans.
“India is already a large market. WazirX, the country’s largest exchange, announced that they have over ten million traders signed up, trading over $40 billion of cryptocurrency. That’s reason enough for the government to begin taxing profits. Prohibition is rarely the answer in such a case. As time goes on, government officials begin to see the long-term value of blockchain-based technologies. They begin to understand that they simply can’t wish it away. They understand that, if they ignore it and ban it, they will be left behind,” opined Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
Finance Minister Nirmala Sitharaman alluded to that in her statement, saying that the “magnitude and frequency of these transactions have made it imperative” for the government to begin taxing. “There has been a phenomenal increase in transactions in virtual digital assets,” she continued.
“So far, Prime Minister Modi has taken the tack opposite of El Salvador’s Bukele,” Gardner said. In past speeches, Modi has attributed cryptocurrencies as a method of money laundering to enhance illicit activities and noted that rampant trading could “spoil our kids.” In November, a bill emerged to ban cryptocurrencies, which was later clarified to be a consideration.
“This is the right move for India. Digital assets are simply not going away. A personal distaste — or failure to understand them — does not mean that it is good policy to ban them. The digital assets industry is moving forward. The time to react is now. It is time for government to encourage innovation in the arena,” said Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Modulus has provided its exchange solution to some of the industry’s most profitable digital asset exchanges, including a well-known multi-billion-dollar cryptocurrency exchange. Over the past twenty years, the company has built technology for the world’s most notable institutions, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“Because of the size of the country, as well as its tech footprint, this is a major move for the industry. And it couldn’t come at a better time. Despite the naysayers, cryptocurrency isn’t going through a winter. It is following the same path as other traditional assets and responding to external factors. India’s movement toward digital assets is proof of just that,” said Gardner.
