Crypto exchanges brace for new tax rules, expect small investors to move to grey market

moneycontrol.com:

Starting from April 1, retail investors and crypto exchanges will be paying a 30 percent tax gain from virtual digital assets, which is expected to drop the volumes of transactions in the coming months, said the experts in a Twitter space session organised by Moneycontrol yesterday.

The panelists included Sathivik Vishwanath, co-founder of cryptocurrency exchange firm Unocoin, Sidharth Sogani, founder & CEO of research firm CREBACO, Manhar Garegrat, executive director and chief of staff of crypto exchange firm CoinDCX and Rashmi Deshpande partner at law firm Khaitan and Co.

They further added that this move will be a major hurdle for the smaller investors and is anticipated to drive the retail investors to the grey market, that is the decentralised exchanges.

Decentralised crypto exchanges (DEXs) do not require any documentation and allow users to directly hold all their assets in their own wallets.

“A few may exit cryptos, but we are expecting to see more participation from institutional investors and high net individuals (HNIs) who are looking to diversify their portfolio. So while I do not expect a huge change in the number of users, we will see customers whose ticket sizes are bigger participating in this soon,” said Vishwanath.

Adding to this, Sogani, said, “If an investor wants exposure in several cryptocurrencies, especially an experienced investor who wants to buy emerging tokens, that will become difficult now. What may happen is people will not invest in these emerging high risk assets in India.”

“The incoming will continue. But, for the small investor who is investing Rs 10,000 to 20,000, it becomes difficult because they don't get in with a long term horizon,” he added.

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