Crypto industry expects growth to lose edge in FY23

economictimes.indiatimes.com:

Mumbai: Retail investors and crypto trading exchanges are bracing for sluggish growth as the new tax regime governing virtual digital assets (VDAs) comes into effect from Friday, April 1. Retail investors also squared off their positions to set off any losses they may have incurred during the previous financial year, industry executives told ET. The Finance Bill 2022, which comes into effect on April 1, also requires traders to pay a flat 30% tax on gains made on VDAs. Further, unlike in other asset classes, retail investors will not be able to set off losses incurred against crypto coins, claim expenses or acquisition costs, or benefit from a reduced slab for long-term capital gains under the new tax regime. Once the new norms are fully in force, it will likely “impact volumes by at least 20-50%,” said a crypto industry player on the condition of anonymity.

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Last year, sustained investor interest had led to a meteoric rise in volumes on crypto exchanges. According to industry estimates, the top five to six Indian crypto platforms clocked $70-100 billion in trading volume in calendar year 2021, with WazirX alone handling about $43 billion. However, such growth is likely to taper off this fiscal if tax provisions are not altered, industry executives said. “Trading volumes are expected to dip significantly after the new tax provisions come into effect. The full impact (will be) felt in the next year, when even common people who have bought cryptos will feel (it),” said Meyya Nagappan, leader of international tax at Nishith Desai Associates. Crypto entrepreneurs are of the