Zerodha's Nithin Kamath says ready to offer crypto if...
Premium- ‘The 30% tax without the option to set-off of losses against other tokens or deductions can lead to a drop in turnover,’ Zerodha CEO Nithin Kamath said
Zerodha Co-founder and Chief Executive Nithin Kamath on Tuesday said his company will offer crypto whenever "SEBI gives its blessing". Kamath's comments came after India decided to impose a tax of 30% on income from cryptocurrencies and other digital assets.
“The 30% tax without the option to set-off of losses against other tokens or deductions can lead to a drop in turnover," the Zerodha CEO said.
The good news for crypto, he said, is that it was finally acknowledged in the budget. But that doesn't mean it's legal, Kamath said, adding that it will only be legal after the crypto bill.
“Until then, regulated entities in India can't offer trading in crypto," he said.
The Zerodha boss further said, “Market markers and active traders are usually 80%+ of turnover in most trading businesses. If costs can't be shown as an expense, losses can compound quickly."
He also said that crypto will be treated as an asset and not a currency. “If it's not a currency, it loses its primary use case. Whenever the crypto bill comes through, my guess is that they will want to ring-fence Indian crypto to restrict capital flows outside India," Kamath said.
Will crypto be treated like stocks?
The Zerodha chief said cryptocurrencies will potentially be treated like stocks. “They will probably have to be held in some demat equivalent overseen by a regulated entity," he said.
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He further said, “If this happens, crypto will be centralized and lose its next big advantage."
Kamath added, “If crypto prices don't keep going up like the last 2 years, I don't see how the current adoption rates will hold up, assuming that some of what I said comes to pass."
However, the crypto ecosystem has welcomed Union Finance Minister Nirmala Sitharaman's proposal for a 30% tax on digital assets for legitimising bets on the assets considered as very risky by the RBI, even as a law on regulating such activity is awaited.
In her Budget Speech, Sitharaman has proposed the tax on income generated at the sale of any digital asset without any deductions, amid a growing proliferation of assets like Bitcoin even as the regulatory structure on them remains unclear.
What are digital currencies?
Crypto or digital currencies are the latest fad across the world and India will next fiscal, beginning April 1, have its own version of the same which essentially would mirror the prevalent physical currency in digital form.
The currency, called 'digital rupee', will be issued by the Reserve Bank in digital form and will be fungible with physical currency.
The exact regulation governing this Central Bank Digital Currency (CBDC) is yet to be finalised.
CBDC is a digital or virtual currency but it is not comparable to the private virtual currencies or cryptocurrency that have mushroomed over the last decade. Private virtual currencies do not represent any person's debt or liabilities as there is no issuer. They are not money and certainly not currency.
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