India’s Crypto Catch-22

Dear Reader,

In 2024, hackers broke into WazirX, once one of India’s largest crypto exchanges. They stole more than 230 million dollars’ worth of cryptocurrency and hit thousands of Indian investors.

One of them is 21-year-old Krish. He still holds about five lakh rupees in crypto and told The Signal Brief that he’s considering moving his money away from Indian crypto exchanges to American ones. 

Krish’s decision points to a larger problem in India’s crypto market.

“When you do tax arbitrage, it makes more sense to invest in US exchanges. You can also offset your losses there,” he said. 

He’s referring to India’s steep tax on crypto gains: Indian crypto investors have to pay a 30% tax on any profit they make. 

That’s despite the fact that India hasn’t legitimised crypto trading in any meaningful way. The Reserve Bank of India (RBI) consistently puts out statements that cryptocurrency has no intrinsic value and that it’s just a speculative asset. 

“The RBI compares crypto to tulip trading,” said Shaswata Kapat, a lawyer who specialises in cryptocurrency law, referring to the famous 17th-century episode when tulip prices in the Netherlands surged and then collapsed.

Despite the government’s hesitance to accept cryptocurrency into the country’s financial system, crypto has built a massive following in India. Today, the country has one of the largest crypto user bases in the world. More than 100 million Indians hold crypto worth billions of dollars.

This week on The Signal Brief, we ask: why hasn’t India’s central bank legalised cryptocurrency, even as millions of Indians continue to use it? And what does this grey zone mean for everyday investors?

Hear from crypto users, lawyers, and journalists who track this space closely in our latest episode. You can find The Signal Brief on YouTube, Spotify, and Apple Podcasts.

Thank you once again for listening and supporting us. We’d love to hear from you; write to us at [email protected] or find us on Instagram or X at @thesignaldotco.

Best,
Kudrat
on behalf of The Core

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