• Indians moved more than $3.8 billion worth of crypto out of the country between February and October of last year.
• This was due to the strict crypto taxation laws imposed in India, which included a 30% tax on crypto profits and a 1% tax deducted at source (TDS) on all transactions.
• Domestic cryptocurrency exchanges lost 81% of their trading volumes within four months following the implementation of the 1% TDS rule.
Crypto traders in India have been transferring large sums of money out of the country in response to the country’s strict cryptocurrency taxation laws. Research conducted by the Esya Center revealed that Indians have moved more than $3.8 billion worth of crypto out of the country between February and October of last year. This is in response to the Indian legislature passing a law that imposed a 30% tax on crypto profits and a 1% tax deducted at source (TDS) on all transactions. This taxation policy was implemented on April 1st, 2022 and the 1% TDS was implemented on July 1st, 2022.
The crypto community in India was highly against the proposed taxation policy, arguing that it would significantly inhibit the industry’s growth and affect liquidity. The research report by the Esya Center noted that domestic cryptocurrency exchanges had lost 81% of their trading volumes within four months following the implementation of the controversial 1% TDS rule. One of the largest cryptocurrency exchanges in India, WazirX, expected to be particularly affected by the new taxation policy.
The outflow of crypto from India has had a significant impact on the country’s economy. The research report noted that the outflow of crypto from the country could have a significant negative impact on the Indian economy, as it is estimated that the total market capitalization of Indian crypto assets is around $50 billion. This is a large sum of money that could be used to stimulate the Indian economy and create jobs.
The Indian government has been slow to respond to the outflow of crypto from the country. The government has yet to implement any measures to prevent this outflow, or to provide any incentives to encourage crypto traders to keep their money in the country. As such, the crypto community in India remains uncertain as to the future of the industry, and the fate of their investments.
In conclusion, it is clear that the outflow of crypto from India is having a detrimental effect on the economy and on the industry as a whole. The Indian government has yet to take any action to address this issue, leaving the crypto community uncertain of their investments. It is now up to the Indian government to take the necessary measures to ensure that the industry can continue to grow and thrive in the country.