Regulators in the South Asian country India are mulling a new ban on cryptocurrencies, local media reported on Friday. Indian financial regulators have been flirting with the idea of banning cryptocurrencies for quite a while. Local media outlet Hindustan Times quoted its sources as saying that the Indian government was in touch with financial experts to make grounds for a ban on cryptocurrencies in the biggest South Asian country.
The report stated that the consultation with financial experts was a part of the Indian government’s efforts to launch a central bank digital currency (CBDC).
Does the Risk Really Outweigh Crypto Benefits?
Indian authorities have been flirting with the idea of banning cryptocurrency for a while. Indian PM Narendra Modi has been reportedly talking about a possible crypto ban. Now, Indian government authorities are in talks with financial experts who favour a crypto ban.
Citing its sources privy with the consultation, Hindustan Times reported that the huddles believed that the risks associated with cryptocurrencies outweighed their benefits and use cases.
Putting their weight behind the crypto ban, the experts stated that central bank digital currency is the ultimate solution as it can do whatever cryptos can with additional benefits. But can CBDCs actually replace cryptocurrencies? Cryptos have long been regarded as the ultimate potential alternative to centralised currencies, which also include CBDCs.
It’s not the first time that Indian authorities are going after cryptocurrencies. The Reserve Bank of India (RBI) blocked financial institutions from providing support to crypto companies in 2018. The Supreme Court of India intervened to overturn the decision later on.
Similarly, another legislation made it to the Indian parliament in 2021 proposing a ban on cryptocurrencies. After intensive discussion among parliamentarians, the government eventually came up with one of the ugliest crypto tax regimes in the world.
One of the Worst Crypto Taxes in the World
At present, crypto traders in India have to pay a 30% tax on cryptocurrency income, and that’s not all! Indian crypto traders are also subject to an extra 1% levy on each crypto transaction. Meanwhile, Indian CBDC, also known as the digital rupee, is in its pilot or beta phase, which has reached 5 million users.
Here are some of the other countries with interesting tax regimes.
- Belgium leads the list of countries with heftiest taxes on cryptocurrencies with a 33% capital gains tax on crypto sales and withholds up to 50% tax from professional crypto income.
- Crypto gains are categorised as “miscellaneous income” in Japan. The East Asian country has imposed crypto taxes up to 55% on both individual investors and active traders.
- The Netherlands is another country with an interesting crypto regime, making people pay taxes based on the theoretical value of their holdings even on unrealised profits. The regime also engulfs mining and staking activities.
- Similarly, other countries like France, Iceland, and Israel have also put in place quite expensive crypto taxes on both capital gains and income.
On the other hand, there are many other countries that attract crypto enthusiasts due to their crypto-friendly tax regimes. Some of these countries are the United Arab Emirates, Germany, and Switzerland.
The Final Thoughts
Many countries have opened their arms to the future innovation, including cryptocurrencies. However, governments in countries like India, the United States, and others have been trying to keep control over the crypto industry. In a bid to expand centralisation to the crypto world, these countries are either mulling ways to ban digital assets or put hefty taxes to discourage their use as investment instruments.
While India is mulling a ban on cryptocurrencies, many crypto companies have already found solace in the United Arab Emirates where the government offers crypto companies to establish their operations in dedicated free zones.
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