Crypto industry expects growth to lose an edge in FY23

April 01, 2022

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 might have caused during the last financial year, industry executives told ET.

The Finance Bill 2022, which becomes effective on April 1, also requires traders to pay a level 30% expense on gains made on VDAs. Further, not at all unlike in other asset classes, retail investors cannot set off losses that are incurred against crypto coins, claim expenses or acquisition costs, or benefit from a reduced slab for long haul capital gains under the new tax regime.

When the new standards are completely in force, it will probably “impact volumes by somewhere around 20-50%,” said a crypto industry player on the condition of anonymity.

Last year, sustained investor interest had led to a meteoric rise in volumes on crypto exchanges. As per industry estimates, the main five to six Indian crypto platforms clocked $70-100 billion in exchanging volume calendar year 2021, with WazirX alone taking care of about $43 billion. However, such growth is likely to taper off this fiscal if tax provisions are not altered, industry executives said.