India has taken the lead in grassroots cryptocurrency adoption, surpassing other nations in this regard, according to the 2023 Global Crypto Adoption Index recently unveiled by the blockchain analytics platform, Chainalysis.
The Chainalysis index, featured in its annual 'Geography of Cryptocurrency' report, shifts the spotlight towards everyday individuals embracing cryptocurrencies rather than focusing solely on transaction volumes. Remarkably, India outshone countries renowned for high levels of crypto trading and mining. Furthermore, it secured the second position in the rankings of countries with the highest estimated crypto value received between July 2022 and June 2023. Over the past year, India amassed an impressive USD250 billion in crypto value, second only to the United States, which recorded approximately USD1 trillion in crypto value during the same period.
Chainalysis' report emphasized India's remarkable crypto adoption rates, which have surged despite the challenging tax regime and regulatory environment in the country. India currently imposes a 30% tax on cryptocurrency gains and withholds 1% at the source.
The report highlighted an interesting phenomenon where while every exchange operating within India is mandated to collect TDS (Tax Deducted at Source) taxes from Indian users, numerous international exchanges have struggled to implement this effectively. This has resulted in a growing influx of Indian users towards foreign crypto exchanges, drawing them away from platforms primarily targeting the Indian market. As a consequence, the report noted a significant increase in web traffic from India to foreign crypto exchanges after TDS implementation last year, with Indian exchanges suffering as a consequence.
Homegrown crypto exchanges have faced legal challenges in India, exemplified by the case of WazirX, which had its funds frozen and underwent investigation by the Enforcement Directorate (ED) last year. The ED revealed its actions in a tweet on August 5, 2022, stating, "ED searches the Director of WazirX Crypto-Currency Exchange & freezes its Bank assets worth Rs 64.67 Crore for assisting accused Instant Loan APP Companies in laundering of fraud money via purchase & transfer of virtual crypto assets."
Indian crypto traders exhibit a penchant for investing in high-value assets such as Bitcoin and Ether. However, they also show enthusiasm for meme-based assets like Dogecoin and the Shiba Inu token.
Despite calls from industry stakeholders for more comprehensive cryptocurrency regulations to foster entrepreneurial growth and attract investors, the Indian government maintains a cautious stance towards the cryptocurrency market. In the past year, crypto traders have urged the government to lower the 30% tax on gains.
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