The World Economic Forum’s four-day annual meeting began on Jan. 16 in Davos, Switzerland. With its broad focus on improving the state of the world, this year’s theme revolves around “cooperation in a fragmented world.” Leaders from around the world have been voicing out and opining on an array of topics.
The WEF agenda made room for cryptocurrency and blockchain topics this time. Like reported a few hours back, Ripple executive Brad Garlinghouse spoke about regulations, the SEC’s actions, and his stance on when the ongoing lawsuit against him and his company would end.
Parallelly, former Reserve Bank of India Governor Raghuram Rajan also spoke about this novel asset class. In an interview with the Reuters Global Markets Forum, Rajan expressed optimism with respect to the underlying technology. He explained the drop in prices of digital assets over the past year will allow investors to focus on the “true value” of the new technology that encapsulates distributed ledgers and smart contracts.
Maximalists have time and again opined that cryptocurrencies will end up replacing fiat currency in the future. According to Rajan, however, the latter has an upper hand in terms of credibility. Elaborating on the same, he said,
“The idea that somehow cryptos are going to maintain value, while the fiat currencies collapse. That’s nonsense. Fiat currencies have won out in terms of which is more credible.”
India’s Cryptocurrency Stance
The Asian nation’s regulators have maintained a relatively hostile stance towards this asset class. Last year, the Indian government imposed hefty taxes on crypto trading. In February 2022, India imposed a 30% tax on income from the transfer of virtual digital assets. Furthermore, neither deductions nor exemptions were allowed.
This was accompanied by a 1% TDS announcement on the payments made for the transfer of digital assets. Additionally, the RBI clarified that any digital asset transaction loss could not be set off against any other gain.
The said impositions were not welcomed by investors. In fact, a recent report pointed out that participants have transferred $3.8 billion [₹32,000 crores] in total trade volume from native to international exchanges.
A couple of days back, the RBI’s current governor, Shaktikanta Das said that cryptocurrencies are, “nothing but gambling” and that their “value is nothing but make-believe.” In fact, he also called for an outright ban on this asset class.
The unchanged skepticism is evidently a “worrying sign.” Retrospectively, industry experts feel that additional stringent measures could be imposed by regulators in the days to come. India’s Union Budget is due in less than a fortnight, and that is when they expect new “tightening” initiatives to be introduced.
Elaborating on the same in a recent report, Srinath Sridharan, a financial expert and visiting fellow at the Observer Research Foundation, said,
“From a regulatory perspective, crypto assets are currently seen with suspicion about their intent of existence, as well as being observed as overtly speculative assets, without any underlying value to it.”
Also Read: India: $3.8B Worth Crypto Moved To Foreign Exchanges Post 30% Tax Rule