India's Central Bank Cracks Down on Cryptocurrencies

India's central bank, the Reserve Bank of India (RBI), is pushing for a prohibition on cryptocurrencies. The RBI wants to ban digital assets entirely, which could affect nearly 39 million crypto traders in the country who hold an estimated $2.1 billion worth of digital assets.

The RBI has been trying to curb cryptocurrency adoption since 2018 when it issued a circular that effectively banned banks from dealing with cryptocurrency businesses. However, the Supreme Court overturned this ban in 2021, ruling it unconstitutional.

Crypto trading resumed after the ban was lifted, but the government made sure it wasn't exactly comfortable for traders. A flat 30% tax on crypto gains and a 1% Tax Deducted at Source (TDS) on every transaction make it difficult for investors to operate in the market.

Tax compliance is also a major issue in India, with less than 25% of crypto traders accurately filing their taxes for the financial year ending March 2023. This means that roughly three out of four crypto holders in the country are either underreporting or not reporting at all.