Violet Vallaya
India’s relationship with cryptocurrencies is akin to a delicate dance, marked by curiosity, regulation, and a pervasive sense of uncertainty. Despite the regulatory haze surrounding the crypto landscape, approximately 7 million Indians have ventured into the digital assets world, investing over $1 billion.
However, amid this burgeoning interest, the legal terrain remains murky, presenting various challenges ranging from contractual ambiguity to privacy concerns.
To grapple with this evolving landscape, the Indian government has taken some steps, such as imposing a 30% tax on crypto income. Nevertheless, cryptos are yet to be recognized as legal tender in the country, leaving a regulatory void that begs for clarity. The absence of a comprehensive regulatory framework poses challenges for investors and crypto platforms operating within India.
In an exclusive interview with The Shib Daily, Vikram Subburaj, CEO of the Giottus cryptocurrency exchange, offered insights into the dynamic world of cryptocurrencies in India, emphasizing the need for regulatory evolution to foster a conducive environment for investment.
Addressing the impact of regulatory ambiguity on crypto investing, Subburaj said, “It is important to acknowledge the nuanced steps the government of India is taking toward establishing a structured regulatory framework.”
“While investors bear the primary responsibility for risk management, the evolving regulatory framework for VDAs (virtual digital assets) is poised to enhance investor confidence.”
Subburaj acknowledged the 30% tax on VDA profits and a 1% tax deducted at source (TDS) as steps toward legitimacy within the sector. He expressed optimism, stating, “This requirement not only underscores the commitment to combating money laundering and terror financing but also embeds a layer of accountability and diligence within VDA service providers like Giottus.”
Subburaj also delved into the role of law enforcement agencies in mitigating risks associated with crypto investments. Law enforcement agencies play a pivotal role in the general operating landscape of VDAs in India. “These agencies, including state police departments, the Enforcement Directorate, the Income Tax Department, and cybercrime units, initially faced challenges in addressing crypto-related incidents due to a lack of familiarity and technical expertise in this novel domain.”
He underscored the importance of collaboration between crypto platforms and the agencies, citing Giottus’ active engagement in empowering and educating law enforcement across various states. “These collaborations are critical not only for resolving individual cases but also for advancing sector-specific legal frameworks,” he said.
When questioned about how Indian crypto holders view the industry, Subburaj highlighted trust in blockchain technology and the demographic dividend as driving factors.
He noted, “Firstly, it is driven by the trust in the transformative potential of blockchain technology and crypto assets. Indian investors are increasingly tech-savvy, well-informed, and inclined towards early adoption of innovative financial instruments that promise not only potential returns but also greater autonomy and financial inclusion. Secondly, the demographic dividend of India, with a substantial young population, plays a crucial role. This demographic is more prepared to navigate the uncertainties of an evolving regulatory environment. “
Subburaj emphasized the importance of investor education and due diligence. He cautioned against falling for promises of quick profits, urging investors to consider the long-term prospects of their investments.
In offering suggestions for regulatory authorities and policymakers, Subburaj advocated for comprehensive regulations, rationalization of taxes, and ease of doing business. He proposed reducing the TDS to incentivize more investors while emphasizing the potential for increased tax revenue in the long run.
Subburaj’s insights underscore the dynamic nature of India’s crypto scene and the imperative for regulatory evolution to foster investor confidence and promote innovation in the sector. As the crypto landscape continues to evolve, stakeholders look toward a balanced regulatory framework that addresses concerns while unlocking the full potential of cryptocurrencies in India.
