Decrypting the cryptocurrencies tax
Decentralised cryptocurrency, blockchain, proof of work, decentralised apps, currency wallets, mining, and proof of stake. These words may sound all too familiar for some of us, thanks to the unprecedented juggernaut of digital currencies in the past few months. However, despite this sense of familiarity, understanding the world of cryptocurrencies and how they work is no child’s play.
For the unversed, cryptocurrencies are new-age digital assets/ currencies, carrying an underlying value and tradable in exchange for goods or services online.
In a world that thrives on the internet and technology, the concept of a digital currency was nothing drastically new, but what caught the world’s attention and imagination was the concept of decentralising them.
Since its debut in 2009, crypto’s have seen a massive uptick, especially in the past few months. Today, there are over 10k+ cryptocurrencies in the world, the most popular ones being Etherium, Bitcoin, and Tether.
As per data published on CoinMarketCap, cryptocurrencies today enjoy a market cap of over $1.3 trillion, touching all-time highs of $2.3 trillion in May this year.
It comes as no surprise that India is not far behind in this global phenomenon. Recent reports suggest over 1.5 crore Indians have invested over Rs 15,000 crore in cryptocurrencies and it is only expected to grow.
India currently does not have a regulatory framework to govern crypto transactions. In a recent media interaction on the government’s stance on cryptocurrency, Finance Minister Nirmala Seetharaman said: “A Cabinet note is being prepared. It's almost nearing completion and then it will be taken to the Cabinet... we will allow a certain amount of window for people to experiment on blockchain and bitcoin. However, the what formulation of cryptocurrency will be part of the Cabinet note which will get ready soon.”
As we wait for more clarity on this from the government, as things stand today, there is a lot of grey area on the regulatory and legal implications of transacting in crypto in India.