India – 1
Mint wrote about RBI’s dislike for crypto:
The RBI has made its displeasure towards cryptos more than clear, over and over again. In fact, in the latest edition of the Financial Stability Report (FSR), published June-end, it offered several reasons for the same.
First, “anything that derives value based on make believe, without any underlying, is just speculation under a sophisticated name.” Second, “cryptocurrencies, typically created on decentralised systems, are designed to bypass the financial system and all its controls, including Anti Money Laundering (AML)/Combatting the Financial Terrorism (CFT) and Know Your Customer (KYC) regulations.”
… Third, “historically, private currencies have resulted in instability over time… as they create parallel currency system(s), which can undermine sovereign control over money supply, interest rates and macroeconomic stability.” This is the RBI’s and many other central banks’ major fear.
Fourth, cryptos “are characterised by highly volatile prices” and this can create its own set of problems along with the “increased use of leverage in investment strategies; concentration risk of trading platforms; and opacity and lack of regulatory oversight of the sector.”
Given these reasons, it is hardly surprising that the central bank has been highly vociferous in opposing cryptos.
T C A Srinivasa-Raghavan wrote about the government stance:
The latest official statement on cryptocurrencies comes in the form of a written Lok Sabha answer by Finance Minister Nirmala Sitharaman on July 18, 2022.
“Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any legislation for regulation or for banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.”
In other words, there’s not going to be any regulatory legislation on cryptocurrencies, probably for decades. That’s the bad news for investors because even in the best of times major economies around the world take decades to hammer out a common approach toward regulatory or taxation issues.
WSJ wrote that “India has almost killed domestic crypto trading with draconian taxes that signal potentially more pain for virtual-currency investors.”
Investment in India’s crypto sector surged after the Supreme Court quashed a ban on banks facilitating crypto trades in 2020. According to data shared by private-markets data provider Tracxn Technologies, India’s cryptocurrency industry has raised $24.2 billion in funding since the beginning of 2020.
But things have taken a turn for the worse this year. In July, India imposed a 1% tax on all digital-asset transfers above a certain size, deductible at the time of transaction. That tax is on top of a 30% rate on income from such assets promulgated in April.
… India’s move to both tax crypto more and dilute some of its signature anonymity should be deeply worrying for the technology’s backers—particularly if other rapidly growing markets begin to believe it has the right idea.
