Modi's Third Term: Mixed Reactions from India’s Crypto Community

Narendra Modi was sworn in as India’s Prime Minister for a third term on Sunday, alongside his coalition allies. He has re-appointed Nirmala Sitharaman as the finance minister, sparking mixed reactions within the nation’s crypto community.

Sitharaman highlighted the importance of international cooperation in crypto policies, while also asserting that cryptocurrencies cannot function as currencies.

On a positive note, the Indian government prioritized creating a crypto policy last year with global consensus during its G20 presidency. Prime Minister Modi also underscored the need for a global framework on cryptocurrencies at the B20 Summit India 2023.

However, India’s 30% tax and 1% TDS on crypto gains have dampened hopes for a crypto-friendly environment.

Saravanan Pandian, Founder and CEO of KoinBX crypto exchange, is optimistic about potential positive changes in India’s crypto policy. He told CryptoNews that India’s crypto policy goals show a “willingness to engage with the growing importance of crypto assets.” Pandian believes that with proper regulation and clarity, India can benefit from this emerging technology while addressing potential concerns.

KoinBX, which celebrated its 4th anniversary last September, has over 1.5 million users and a portfolio of more than 120 crypto assets.

Sumit Gupta, Co-Founder of CoinDCX, also maintains a positive outlook. In an exclusive interview with CryptoNews, he said that a favourable consideration of cryptocurrencies could provide a level playing field for domestic exchanges.

India’s crypto service providers were brought under the anti-money laundering (AML) framework in March 2023, mandating exchanges to comply with the rules. India has also been cracking down on non-compliant crypto exchanges, issuing notices to nine exchanges in December, including Binance, Kraken, and MEXC Global.

To meet regulatory requirements, KoinBX has enhanced its KYC and AML procedures. These measures include thorough identity verification, robust transaction monitoring systems, and real-time sanction scanners to screen transactions against global sanction lists.

CoinDCX was the first in India to register with the Financial Intelligence Unit – India (FIU-IND) on March 16, 2023. The exchange is also a member of CyberSafe, an initiative of the Ministry of Home Affairs, India.

India’s stiff taxes on crypto transactions—30% on profits and 1% TDS on all transactions—have led to a significant user shift to offshore exchanges. A report by the Indian think tank Esya Centre revealed that the 1% TDS resulted in the loss of potential revenues of approximately $420 million.

In an exclusive interview with CryptoNews, CoinDCX co-founder Neeraj Khandelwal called the 1% TDS “a death blow” to the industry. Gupta noted that the exchange saw over a 95% drop in volumes since the taxation rules were announced. Despite these challenges, CoinDCX and the Bharat Web3 Association are actively engaging with the government to advocate for a tax reduction, hoping to prevent a crypto ‘brain drain.’

Pandian of KoinBX echoed these concerns, stressing the impact of these taxes on innovation and growth. He added that KoinBX is committed to navigating these challenges while urging the government to reconsider its tax policies to support the sector’s growth.

KoinBX has been actively engaging with policymakers through industry advocacy bodies, ensuring their perspectives are heard in the legislative process. The exchange is planning new features and launches in the coming months, including security protocol advancements and new trading pairs.

The global crypto industry has seen positive growth, thanks to the Bitcoin and Ethereum spot ETF approvals by the US SEC, leading to increased institutional interest in India. According to Gupta of CoinDCX, this move has significantly boosted market activity in India, though regulatory uncertainties remain a challenge.

To cater to this interest, CoinDCX recently launched CoinDCX Prime, gaining support from over 100 institutional investors. The exchange reported a 2000% increase in deposits from customers early this year and is offering incentives for users to migrate their assets to CoinDCX.

CoinDCX also launched the Okto orchestration layer to simplify the Web3 landscape and is developing the $OKTO token, which will power the Okto Chain. The exchange plans to airdrop seven percent of the total $OKTO token supply to early adopters.