Crypto: An Epic Tale of Highs and Lows The crash of FTX did not help the crypto community. A major chunk of the crypto ecosystem has been wiped out due to its ties with FTX. The bear market has brought strong companies with great Web3 products to the fore. The continuing bear market has focused the world's attention to crypto which has led to more attention being paid to real-world use-cases of crypto as well as of Web3.

Crypto being a prospective sunrise sector is languishing at the bottom of the pile due to the heavy tax impositions. Subsequently, the crypto sector has lost a total of INR 32,000 crore in trading volume between February and October last year, moving to foreign exchanges, according to a Delhi-based think tank Esya Centre. The report suggests the existing tax architecture may result in a loss of approximately INR 99.3 trillion of local exchange trade volume over the next four years.

The trading volume dropped by 90 per cent in the first week of imposition of the taxes. Other jurisdictions have capitalised of the downfall of crypto in India wherein more liberal jurisdictions have been successful in luring away India's top Web3 talent.

"The key to success during a crypto market downturn is to remain focused on long-term goals and agile in the face of changing market conditions. By taking a strategic and proactive approach, startups can position themselves for success in the long run," said Punit Agarwal, founder, KoinX

The crash of FTX did not help the crypto community. A major chunk of the crypto ecosystem has been wiped out due to its ties with FTX. The bear market has brought strong companies with great Web3 products to the fore. The continuing bear market has focused the world's attention to crypto which has led to more attention being paid to real-world use-cases of crypto as well as of Web3.

"The Finance Bill mentioned a modification to the Income Tax Act under section 271C that will penalise non-payment of crypto or VDA TDS. A penalty equal to the unpaid TDS will be imposed by a joint commissioner, as well as a jail term of up to six months. In the event of a payment delay, this could result in a 15 percent annual interest charge for late payment. This provision is intended for traders who were trading in foreign exchanges to avoid TDS provisions. Traders should not try to escape TDS by using offshore or non-compliant platforms," said Rajgopal Menon, VP, WazirX.

Budget 2023 introduced an important provision on penalty and prosecution for non-compliance with TDS norms that would deter Indian crypto investors from avoiding TDS by investing through the gray market or non-compliant offshore entities. The crypto sector continues to advocate for lower TDS rates for better compliance.

As per a recent NASSCOM estimate, the industry can contribute INR 88 lakh crore to India's gross domestic product (GDP) over the next 10 years. There has also been a 138 per cent rise in blockchain and VDA related jobs in the country since 2018, which is expected to increase a further over 100 per cent on a year-on-year basis over the next two years. The new tax regime has resulted in a significant outflow of investors and resulted in losses for Web3.0 companies.

NASSCOM data postulates that more than 60 per cent of the 450 Web3.0 startups operating in India are headquartered outside India and 11 per cent of the world's Web3.0 talent resides in India. The taxes have also lead to Indian talent being impacted by way of a domino effect. The dearth of capital for the Web3.0 companies would directly result in the dearth of opportunities for the budding Web3.0 talent pool. The budding talent pool would look for greener pastures in a tax-friendly jurisdiction that would in turn drain the Indian talent pool.

India is in the driver's seat of the Web3.0 revolution combined with the recently flagged-off 5G project is expected to boost India's chances of leading the Web3.0 revolution. Its mobile and internet-friendly large population gives the country a huge advantage that India can leverage to accelerate the growth and development of the Web3.0 ecosystem

Finance minister, Nirmala Sitharaman recently urged IMF to step in and provide guidelines to be adopted by the members of the G20. Intergovernmental bodies such as the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), and Financial Stability Board (FSB) have made significant progress in defining various aspects of the crypto businesses, and recommending best practices and standards.

"Intergovernmental bodies such as the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), and Financial Stability Board (FSB) have made significant progress in defining various aspects of the crypto businesses, and recommending best practices and standards," said Ashish Singhal, CEO and co-founder, CoinSwitch.

Crypto's future in India would weigh in on the guidelines of IMF and the government's decision to accept them.