As India’s crypto market faces legal and other hurdles, it has surged from second to fourth place in the 2022 Global Crypto Adoption Index, crypto analytics firm Chainalysis said in a statement. a report.
The index tracks countries adopting cryptocurrencies or investing in digital assets. The study finds that India’s local crypto adoption was higher than that of the United States, ranked fifth in the index.
Taxation of crypto in India
Indian traders have turned to global crypto exchanges as registrations on Binance’s crypto app skyrocketed after India introduced a 1% tax on deduction (TDS) on crypto transactions, a reported Bloomberg. Daily crypto volumes on major India-based platforms fell by more than 90% after the 1% crypto transaction tax came into effect in July, according to the report.
India has classified cryptocurrency as Virtual Digital Assets (VDAs), and profits generated from crypto transactions fall under the 30% tax bracket. Also, if the transaction amount exceeds Rs. 10,000 in a single fiscal year, a 1% tax (TDS) is levied at source as per the rules.
Crackdown on Crypto Exchanges
The crackdown on crypto exchanges by Indian authorities has also been cited as one of the reasons traders have turned to global exchanges, especially after the controversy over fake Chinese loan apps.
These apps provided loans at high interest rates to borrowers without taking collateral and resorted to illegal practices to extract the money when they were unable to repay.
Emerging markets dominate the list
People in the lower and upper income brackets in emerging markets invest more in cryptocurrencies than their counterparts in developed countries.
“Users in lower- and upper-middle-income countries often rely on cryptocurrency to send remittances, preserve their savings in times of fiat currency volatility, and meet other financial needs unique to their economies. These countries have also tend to rely on bitcoin and stablecoins more than other countries,” the Chainalysis report states.
Global Crypto Adoption Remains High
While growth has become erratic amid the current bear market, the global cryptocurrency adoption rate remains significantly higher compared to the bull market phase of 2020. A significant number of people who invest in crypto -Currencies during periods of rising prices tend to stay even when prices fall, allowing the ecosystem to grow through market cycles, the report adds.