Pune Stock：Interpretation of the Indian blockchain market： relatively low investment activities, the most critical of tax reform
Article reprint source: felix
Author: Ryan Yoon & Yoon Lee, Tiger Research
Compilation: Felix, Panews
● India’s blockchain market is constantly developing: India has a young population, a strong technical talent pool, and supportive government policies.Web3 technology is widely used, ranking first among the global cryptocurrencies in 2023.
● Taxation reform and regulatory changes: In the first quarter of 2024, India’s tax system and regulatory environment have changed significantly to the web3 and blockchain industries, including excessive TDS (source deduction tax) and capital profit tax adjustment adjustment, as well as cryptocurrencies to cryptocurrenciesThe supervision of the exchange is strengthened.
● Development of investment and ecosystems: Despite the uncertainty of the regulatory environment, India’s web3 ecosystem continues to attract investment and continue to develop.Although the new investment in the blockchain industry in the first quarter was obviously insufficient, some projects were still being constructed.Pune Stock
1.The status quo of the Indian blockchain market
As the previous report "Overgena of the Indian Web3 Market" emphasized, India is rapidly becoming an important participant in the global blockchain market.Several key factors to promote this growth are: 1) young population structure, 2) rich technical talents, 3) government policies that are conducive to technological innovation.In addition, India’s population exceeds 1.4 billion, providing an ideal environment for the widely adopted Web3 service.According to Chainalysis’s "Global Crypto Currency Adventure Index in 2023", India ranks first in the world and has increased three places from the fourth place last year, reflecting the growth of the Indian Web3 market.
India’s Web3 ecosystem is booming.It is supported by more than 1,000 active start -ups, especially in the important web3 center Bangalore.Although the investment amount has declined in 2023, the frequency of investment has remained stable, indicating that the market continues to grow.In addition, the Indian government is gradually adopting Web3 technology to test digital rupees through the CBDC project and promote the construction of a national blockchain framework.This change from the initial prohibition to support highlights the understanding of the potential of the blockchain and the commitment to the cultivation of the healthy technology ecosystem.
2.Changes in the first quarter of 2024
2.1 The changes in the expected taxation system
Participants in the Indian blockchain market urged the government to reduce the TDS (source deduction tax) and 30%profit capital gains tax of 1%of cryptocurrency transactions in the upcoming 2024-25 annual budget.
TDS is a particularly heavy burden for investors because it levies 1%tax during currency.For example, if you sell Bitcoin worth 1,000 rupees, the tax of 9.8 rupees will be levied, that is, 1%of 998 rupees, excluding transaction fees (2 rupees, assuming 0.2%).
According to a report from the ESYA center, India has plummeted 90%since its taxation was announced in 2022.In response, industry organizations and participants including the Blockchain Industry Association and the Bharat Web3 Association called on the government to reduce TDS to 0.01%, and allow encrypted transactions to lose losses and profits, similar to the stock market.
The blockchain industry in India was disappointed with the temporary budget announced in February, and the budget maintained a 30%tax on cryptocurrency profits and 1%of the source deduction tax (TDS).Considering that these decisions were made before the general election, it was expected that the taxation structure would not change significantly.After the April/ May election, the tax reform is expected to be realized.The industry still has hope for adjustments. These adjustments may include clear supervision, abolish 1%of TDS, and reduce overall tax rates.
2.2 Blocking Global Capital Exchange
In December 2023, the Indian Planning Commission issued a notice to 9 encryption exchanges that violate the money laundering law.Further supervision operations began in January 2024Agra Stock. At that time, mainstream global encryption exchanges, including Binance, Kraken, and OKX, were required to delete their applications from the Indian app store.These requirements were quickly responded, and both Apple App Store and Google Play Store were removed from related applications.OKX also announced in March that the business in India will be stopped before April 30, highlighting the major challenges facing the current regulatory framework.
Last year, when Coinbase stopped accepting new customers in India, the regulatory pattern of the Indian encrypted exchanges began to change.COINBASE CEO Brian Armstrong attributed this decision to the informal pressure of the Indian Bank of India.
Fortunately, in March of the same year, the exchange Kucoin announced that it has become the first global exchange approved by the financial intelligence department (FIU), marking a major change in supervision.This approval allows Kucoin to start acquiring users within the established regulatory framework.This change in the first quarter revealed the transformation of Indian regulatory intensity.
2.3 Development of investment ecosystemsJaipur Wealth Management
Despite the uncertainty of the regulatory environment, India’s web3 ecosystem is still developing.Recently, Core Foundation has launched a $ 5 million innovation fund to promote the development of the Indian Web3 ecosystem.Solana and Coindcx also launched a $ 3.2 million developer support plan.These large -scale support plans show their confidence in the Indian market.
2.4 New funds
Stan is an Indian blockchain e-sports company. In January this year, he completed the Pre-A round of financing and raised $ 2.7 million from Coindcx and other investors.Stan is establishing a blockchain gaming community. In addition to releaseing its own official NFT, it also announced the launch of a market platform.
In the first quarter of 2024, the new investment in the blockchain industry was significantly insufficient.The downturn of investment activities may be affected by the two main factors: global interest in AI technology and the surge in capital flow, as well as continuous regulatory uncertainty in India.
2.5 Other changes
Despite their efforts to support Web3 and blockchain ecosystems, the company is transferring its business to Dubai and Abu Dhabi.This transformation is largely due to the vague and strict tax policy of evasion of Indian regulations.Especially in Dubai, incentive measures such as reducing income tax and corporate tax have attracted encrypted enterprises.
The Indian encrypted exchange Mudrex also provides Indian investors with US spot Bitcoin ETFs and supports four spot ETFs of BlackRock, Fidelity, Franklin Templeton and Vanguard.
Finally, Coindcx merged with the closure Koinex, which solved the problem of Asset withdrawal of KOINEX users and obtained some users.CoindCX is the first encryption exchange in India to become a unicorn. The current valuation is US $ 2.15 billion. It is expected that its influence will be further expanded after the merger.
The most critical problem currently facing the Indian blockchain market is to carry out comprehensive tax reform.Although the influx of investors seems to only push up prices without promoting major market development, investors may contribute to a healthier market environment and provide a lot of support for pioneering projects.
In addition, the policy direction formulated by the new government after the election will be essential to reshaping the future of the Indian blockchain market.The results of these elections and subsequent policy decisions may become a key turning point, determining whether the market can overcome the current challenges and exert its entire potential.
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