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'Crypto yet not legal": Zerodha co-founder's take on Budget

Online broking firm Zerodha's co-founder Nithin Kamath seemed skeptical about crypto adoption in India after Finance Minister Nirmala Sitharaman's Budget speech earlier today clarified on taxation of cryptocurrencies and other virtual assets for the fincial year 2022-2023.

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Crypto yet not legal”: Zerodha co-founders take on Budget
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2 Feb 2022 3:24 PM IST

Online broking firm Zerodha's co-founder Nithin Kamath seemed skeptical about crypto adoption in India after Finance Minister Nirmala Sitharaman's Budget speech earlier today clarified on taxation of cryptocurrencies and other virtual assets for the fincial year 2022-2023.

In a series of tweets, Kamath mentioned that post the Budget announcements, crypto, at best, will be treated as an asset and not a currency. "If it's not a currency, it loses its primary use case. Whenever the crypto bill comes through, my guess is that they will want to ring-fence Indian crypto to restrict capital flows outside India," the young billionaire pointed out in a series of tweets.

Explaining his reading of crypto after Budget 2022, he elaborated that crypto will potentially be treated like stocks. They will probably have to be held in some demat equivalent overseen by a regulated entity. If this happens, crypto will be centralized and lose its next big "advantage."

He further added, "So yeah, if crypto prices don't keep going up like the last 2 years, I don't see how the current adoption rates will hold up, assuming that some of what I said comes to pass."

"The 30 per cent tax without the option to set-off of losses against other tokens or deductions can lead to a drop in turnover. Market markers & active traders are usually 80%+ of turnover in most trading businesses. If costs can't be shown as an expense, losses can compound quickly," he explained further.

However, he also mentioned that the good news for crypto is that it was finally acknowledged in the Budget. That doesn't mean it's legal—it will only be after the crypto bill. Until then, regulated entities in India can't offer trading in crypto.

Crypto Zerodha Budget Startup 
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