Filing for AY 2024-25 is coming soon
Filing for AY 2024-25 is coming soon
Keep calm and sign up for early access to our super filing platform
Index

Future of Cryptocurrency

By Sujaini Biswas

|

Updated on: Mar 17th, 2023

|

7 min read

In recent times, the cryptocurrency market has witnessed stellar growth. Over the past decade, it has grown from a small community of a few developers to a trillion-dollar market that has touched millions of lives. 

This digital currency market has brought several new opportunities, like advanced security of blockchains, smart contracts, NFTs, crypto games, Metaverse, DAOs, and much more. 

However, in the spring of 2022, the world saw a downward spiral of crypto due to multiple reasons, like Russia's invasion of Ukraine, surging inflation, and other macroeconomic factors. This has led investors to think about cryptocurrencies' future and their impacts on investors. 

The view on crypto worldwide

Although the total market value of cryptocurrencies has fallen from $3 trillion to less than $1 trillion, it does not denote its total decimation. These digital assets can bounce back and change the current scenario of the world’s financial ecosystem. 

Only if governments around the world introduce some regulatory policies would it benefit investors. This is so because these policies would offer greater legitimacy and stability to the coins. Moreover, it will reduce the speculative aspects of this digital asset. 

However, the world has a sharp difference in opinion on adopting cryptocurrencies. There are some countries that wholeheartedly support this digital asset due to its growth potential. On the other hand, there are some countries that do not support the implementation of crypto due to its anonymity and decentralised nature. 

For example, El Salvador is the only country globally recognising Bitcoin as a legal tender. In contrast, countries like Qatar, Egypt, China, and Vietnam prohibit its use. This may be because many malicious users exploit this digital currency for illegal activities like money laundering, terrorism, drug trafficking, etc.  

One of the world's leading nations, the USA, has unveiled a plan to establish new cryptocurrency regulations. It has decided to view crypto assets as commodities instead of securities. 

Moreover, the Commodity Futures Trading Commission (CFTC) will be put in charge of enforcing these regulations. The new regulations will also make it mandatory for issuers of stablecoins to keep high-quality liquidity assets in an amount that is equal to the number of stablecoins they issue. They also need to publicly disclose their holdings. Among all the negativity you hear about cryptocurrencies, you can view these measures as good news for crypto investors as governments are bringing about regulations that can benefit the crypto community. 

Crypto and its scope in India

In India, there is widespread ambiguity from the government when it comes to cryptocurrencies. The government prohibited cryptocurrencies in 2016; however, recently, it has released a set of taxation rules relating to this digital currency. There will be a flat 30% tax on profit from crypto and other digital assets. There will also be a Tax Deduction at Source (TDS) of 1% for transactions greater than Rs.50,000.  

Investments in crypto assets have also gained great momentum. According to Tracxn, in 2021, there were over 48 fundraising rounds with a total investment of $638 million. In the first half of 2022, Web3 sectors and crypto startups have made 43 agreements amounting to $1 billion. Furthermore, our country plans on launching CBDC (Central Bank Digital Currency), which you can consider as the digital rupee in the current financial year. 

If you have tracked the market rise and fall of crypto assets over the years, you may have noticed the trend of a sharp fall after a huge rise in the price of crypto assets. However, considering the momentum of investments in this sector, the bear market trend is just a slight bump along the way. 

Experts have made certain predictions regarding certain aspects of the Indian crypto market. They are:

  1. Non-fungible tokens (NFTs)

NFTs have seen a great upward trend in recent times. In the recent bull run, they have been prominent among crypto enthusiasts and traders. They can represent real-world items like real estate and artwork. 

You can easily buy, sell and trade them while keeping the probability of fraud to a minimum. As the technology behind NFTs keeps evolving, its market will mature and move towards a more practical form. It will also attract a lot of investors from the Indian market. 

  1. Play-to-Earn (P2E) gaming

When you consider the numbers, India is the largest blockchain gaming market. Our country is all set to lead the adoption of blockchain gaming. There will be many who will play and earn a living from blockchain gaming. Apart from earning crypto by playing NFT games, Indian gamers can also collect rare NFTs as in-game items. Furthermore, they can trade or sell them to other players for additional income.  

  1. Decentralised finance

Decentralised finance is an emerging financial technology powered by blockchain. It has the potential to remove the control of banks and other financial institutions over money, financial product, and services.

 Your assets are stored in a secure digital wallet, and you can access them via an internet connection from literally anywhere. Moreover, it drastically reduces the transaction fees that banks and other financial institutions charge for their services. 

  1. Centralised cryptocurrency exchanges

As blockchain-based solutions get more implementations in our daily lives, centralised cryptocurrency exchanges may see a decline in their activities. This is due to the reason that they use third parties to conduct their services. Experts predict that a lot of users may go dormant and hold their assets for a long period of time.

 Centralised exchanges will also introduce a lot of long-term investment products like Crypto Baskets. They will function similarly to that of mutual funds in stocks. 

In a developing nation like India, cryptocurrencies have a massive potential for adoption and growth both from individual and business perspectives. As cryptocurrencies will cut transaction costs and time, Peer-to-peer lending, remittance payments, and international trade will greatly flourish. 

However, the Indian Government needs to take measures for the mass adoption of cryptocurrencies and build a financial framework for the same. Experts predict greater crypto adoption in India in the upcoming years. 

About the Author

A manager by day and a sloth by night. I enjoy writing on topics like personal finance and investments. With 10 years of experience in fintech, creating content that resonates with readers is my forte. Read more

summary-logo

Quick Summary

The cryptocurrency market has seen exponential growth despite recent setbacks. Governments worldwide are formulating regulations. In India, the government has introduced taxation rules for cryptocurrencies. The country is also considering launching a Central Bank Digital Currency. Key trends in the Indian crypto market include NFTs, play-to-earn gaming, and decentralized finance. Experts predict increased adoption of cryptocurrencies in India.

Was this summary helpful?
liked-feedbackliked-feedback

Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

Cleartax is a product by Defmacro Software Pvt. Ltd.

Company PolicyTerms of use

ISO

ISO 27001

Data Center

SSL

SSL Certified Site

128-bit encryption