Centre's new clarifications lethal to digital currencies: industry

New Delhi: The cryptocurrency industry termed the Union government new measures harmful to the market after the latter proclaimed that losses incurred from one cryptocurrency could not be balanced by the gains from transactions involving another cryptocurrency. The cryptocurrency industry requested the Centre reconsider the measure, The Indian Express reported.

Nishal Shetty, CEO WazirX, said that treating profits and losses of each market pair distinctly would discourage participation in the currency and choke the industry, which is ultimately unfortunate.

CoinSwitch CEO Ashish Singhal said that the new announcement is detrimental to the industry and millions who have invested in it. The recent clarification would chase users away from KYC-compliant exchanges, platforms, the underground peer-to-peer grey market etc. This would act against the purpose of taxing the sector itself, he said. According to him, the Union budget recognised virtual digital assets, such as cryptocurrencies, as an emerging budget, but a regressive provision such as current clarification would discourage retail investors from participating, he said.

Sathvik Vishwanath and Ashish Kumar of Fundamentum Partnership said it is a negative step because it appears restrictive and might 'disincentivise' investors. Anshul Dhir from the industry said that the move would discourage people in the web3.0 space, cause an exodus of smart and talented entrepreneurs and practically kill the industry.

The Centre has said that the infrastructure costs incurred in cryptocurrency mining or any virtual assets will not be allowed as deductions under Income Tax Act.

The Finance Minister Nirmala Sitharaman had announced in Budget 2022-23 a flat 30 per cent tax on income from transactions of crypto or any other digital currencies, starting April 1, 2022.