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RBI warns of crypto ‘dollarization’ of Indian economy

May 17, 2022 Coin Telegraph

Crypto “will seriously undermine the RBI’s capacity to determine monetary policy and regulate the monetary system of the country,” according to Reserve Bank of India officials.

Officials from the Reserve Bank of India (RBI) have reportedly sounded the alarm bells again over crypto adoption, which they claim will ultimately lead to the “dollarization” of the local economy.

According to a Monday report from the Indian branch of the Economic Times — which cited unnamed sources — the RBI’s concerns are focused on U.S. dollar-dominated cryptocurrencies taking away market share from the Indian rupee.

The publication notes that RBI officials, along with its governor Shaktikanta Das, provided a briefing to the Parliamentary Standing Committee on Finance this week. In it, they took a very skeptical stance toward crypto’s potential influence on the financial system. An unnamed official is quoted as saying:

“Almost all cryptocurrencies are dollar-denominated and issued by foreign private entities, it may eventually lead to dollarization of a part of our economy which will be against the country’s sovereign interest.”

“It [crypto] will seriously undermine the RBI’s capacity to determine monetary policy and regulate the monetary system of the country,” they added.

The RBI was said to have been particularly irked by the notion of crypto being used in cross-border transfers instead of the rupee, while the common anti-crypto tropes of terror financing, money laundering and drug trafficking were also highlighted again.

This is the second time this month that the RBI has expressed anti-crypto action, with Coinbase CEO Brian Armstrong suggesting last week that the exchange’s abrupt stoppage of its United Payments Interface (UPI) in India was due to pressure from the RBI.

“So a few days after launching, we ended up disabling UPI because of some informal pressure from the Reserve Bank of India (RBI), which is kind of the Treasury equivalent there,” he said, adding that they basically applying “soft pressure behind the scenes to try to disable some of these payments which might be going through UPI.”

It appears that the Indian government is also not looking favorably on digital assets of late, and has instead taken a relatively stifling approach to crypto since outlining intentions to regulate the sector in December.

On April 1, the government implemented a 30% crypto tax on digital asset holdings and transfers, along with several other stringent taxation guidelines that were based on gambling and lottery ticket win tax rules. In the following ten or so days after the laws went into effect, trading volume on top Indian crypto exchanges declined as much as 70%.

Crypto capital gains one of four key areas for Australian Tax Office

May 16, 2022 Coin Telegraph

ATO

“Remember, you can’t offset your crypto losses against your salary and wages,” said ATO assistant commissioner Tim Loh.

The Australian Taxation Office (ATO) has outlined crypto capital gains as one of four key areas of focus in 2022.

A capital gain or loss refers to the price difference between the time an asset was purchased and the time it was sold. The percentage owed to the ATO varies between income brackets and duration of ownership, but in general, the rate is reduced for assets held longer than 12 months.

The ATO, which has fired off many warnings to crypto investors over the past few years, has also directly mentioned nonfungbile tokens (NFTs) as an asset class it will be scrutinizing for correct tax reporting.

According to a May 16 announcement, alongside capital gains from crypto, property, and shares, the ATO will also look at record-keeping, work-related expenses, and rental property income/deductions.

With the prices of most crypto assets suffering from major losses in 2022, the ATO noted that any sold crypto asset, including NFTs needs to have a calculated capital gain or loss recorded with it, and will be “taking firm action” to deal with taxpayers who try to falsify their records

ATO assistant commissioner Tim Loh also suggested that the taxation body already has a fair idea of people’s investment activity, but urged everyone to keep diligent records to avoid any penalties, stating:

“While we receive and match a lot of information on rental income, foreign-sourced income, and capital gains events involving shares, crypto assets, or property, we don’t pre-fill all of that information for you.”

Loh also went on to note that the ATO has seen a significant rise in local crypto investors who may not be aware of the correct reporting methods:

“Crypto is a popular type of asset and we expect to see more capital gains or capital losses reported in tax returns this year. Remember you can’t offset your crypto losses against your salary and wages.”

“Through our data collection processes, we know that many Aussies are buying, selling, or exchanging digital coins and assets so it’s important people understand what this means for their tax obligations,” he added.

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May 14, 2022 Bitcoin.com

India Imposes 30% Crypto Tax, But Politicians Are Fighting Back

March 25, 2022 The Crypto Briefing

60,000 Indians Petition Government to Lower Crypto Tax to Avoid ‘Devastating Impact’

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U.S. Crypto Investors Reject IRS Settlement

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Why did WazirX token (WRX) jump 30% after India announced its big crypto tax?

February 2, 2022 Coin Telegraph

Altcoin

The Indian government said that it does not treat cryptocurrencies as illegal, clarifying that its transactions remain in a grey area.

WazirX exchange’s native token, WRX, benefited the most from India’s latest U-turn on crypto this week.

WRX’s price jumps on India tax news

WRX’s price surged nearly 30% to over $1, hitting a three-week high after the Indian government had announced a new tax regime for the regional crypto sector, reversing entirely from its earlier strict stance that even contemplated an outright ban on the emerging industry.

$WRX - Up on news! https://t.co/Ln504eUZzm pic.twitter.com/zN3pW84DPY
— Yo! Crypto ₿ (@YoCrypto) February 1, 2022

In her budget speech on Tuesday, Finance Minister Nirmala Sitharaman said that the government plans to tax the income from trading cryptocurrencies at 30%, which, while among the highest rates in the world, also means that digital assets are recognized in India and may soon gain legal status.

WRX’s price jumped after Sitharaman’s speech, which was probably due to its association with an India-based crypto exchange, WazirX. The WRX token serves as a utility token on the platform, benefitting users with trading fee discounts and access to new token airdrops.

Another 250% rally ahead?

Utility tokens typically derive their value from speculations that their adoption would grow in tandem with the growth of their platform, one that is no longer in regulatory limbo.

Javon Marks, an independent market analyst, predicted further price booms in the WRX market, noting that the WazirX token could climb toward $3.80 from its current $1 levels. At the core of his bullish analogy was a technical setup, as shown in the attached chart.

*WRX/USD three-day price chart. Source: Javon Marks, TradingView*

In detail, WRX’s ongoing price boom had its price break above a multi-month downward sloping resistance trendline. Marks noted that the breakout “technically” positions the WazirX token to rise by another 252% in the coming sessions to its April 2021 resistance targets.

“As long as WazirX holds this break, this target will remain pushable,” the analyst tweeted on Wednesday.

The statement also surfaced as the crypto market, on the whole, remained in a state of turmoil after a depressive January performance. WRX itself dropped more than 30% into the month, mirroring similar moves across the top-ranking crypto assets, including Bitcoin (BTC), which tanked nearly 18% in the same period.

The interim pullback scenario

WazirX’s day-to-day correlation with broader crypto market trends, however, puts WRX at risk of bearish continuation. It is primarily because the catalysts that played a key role in pushing the digital assets lower in January 2022 — the United States Federal Reserve’s hawkish turn — remain intact.

Additionally, WRX’s price faces a technical resistance confluence that may limit its recovery bias in the sessions ahead. Specifically, a combination of price ceilings, including a descending triangle’s upper trendline, have already been capping the WazirX token’s upside attempts.

*WRX/USD daily price chart featuring descending triangle setup. Source: TradingView*

Other resistance levels include a 50-day exponential moving average (50-day EMA; the red wave) and a 200-day EMA (the blue wave). A pullback upon testing them risks dropping WRX’s price to the descending triangle’s lower trendline near $0.75.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Crypto tax