NAKSH YEDKE

INFLUENCE OF
CRYPTOCURRENCY ON
THE INDIAN MARKET.
INDEX
• What is cryptocurrency?
• How does crypto work?
• Current Indian crypto market
• Factors contributing to the growth of
crypto in India

• Revenue statistics
• Cryptocurrency tax in India
• Impact of crypto on traditional banking

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WHAT IS
CRYPTOCURRENCY?
Cryptocurrency is a digital payment system that doesn't rely on
banks to verify transactions. It’s a peer-to-peer system that can
enable anyone anywhere to send and receive payments. Instead
of being physical money carried around and exchanged in the
real world, cryptocurrency payments exist purely as digital
entries to an online database describing speci ic transactions.
When you transfer cryptocurrency funds, the transactions are
recorded in a public ledger. Cryptocurrency is stored in digital
wallets.

Cryptocurrency received its name because it uses encryption to

verify transactions. This means advanced coding is involved in
storing and transmitting cryptocurrency data between wallets
and to public ledgers. The aim of encryption is to provide
security and safety.

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 HOW DOES
CRYPTO WORK?
Cryptocurrencies run on a distributed public ledger called
blockchain, a record of all transactions updated and held by
currency holders.

Units of cryptocurrency are created through a process called

mining, which involves using computer power to solve
complicated mathematical problems that generate coins. Users
can also buy the currencies from brokers, then store and spend
them using cryptographic wallets.

If you own cryptocurrency, you don’t own anything tangible.

What you own is a key that allows you to move a record or a unit
of measure from one person to another without a trusted third
party.

Although Bitcoin has been around since 2009, cryptocurrencies

and applications of blockchain technology are still emerging in
inancial terms, and more uses are expected in the future.
Transactions including bonds, stocks, and other inancial assets
could eventually be traded using the technology.

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 CURRENT INDIAN
CRYPTO MARKET
Having a sizeable tech-savvy population, India is engaging in
more crypto-related activity. Since lifting the ban after the
Supreme Court deemed it unconstitutional, the market
experienced rapid growth and was valued at US$150.214
million in 2020.
The market continues to grow with various companies in the
niche, such as TCS's Quartz Solution for Crypto and WazirX, a
Mumbai-named cryptocurrency exchanger. According to a
report by Statista, the revenue is set to hit US$222.70m by the
end of 2023.
The market continues to thrive despite certain limiting factors,
like the tax rate on cryptos. India imposes a 30% tax on crypto
gains and an additional 1% deduction for each transaction. Such
measures limit the full capability of the market.

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 FACTORS CONTRIBUTING
TO THE GROWTH OF
CRYPTO IN INDIA.
1. YOUTHFUL POPULATION AND TECH
ENTHUSIASTS
India displays a demographic characterized by young
innovative minds. This element contributes signi icantly to
how receptive they will be to these emerging trends in the
inancial system. They are more open-minded and will better
utilize these inventions.

2. LIFTING OF RBI BANKING BAN

Thanks to the trading community's revolt, India got a piece
of the action after the ban preventing crypto trading was
lifted. This move paved the way for a new way of transacting
through these digital assets instead of relying on traditional
banking methods.

3. INCREASED AWARENESS AND MEDIA COVERAGE

Cryptos gained massive attention globally after the Bitcoin
price upsurged. This news traveled far and wide, attracting
investors looking to make quick money globally. Increased
discussions and forums on the subject sparked in India,
creating awareness about this innovation.
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4. CRYPTO EXCHANGES AND TRADING PLATFORMS
After the ban, India experienced an increase in crypto irms.
Combined with the global exchange platforms, Indians can now
trade these assets easily. Furthermore, some of these sites o er
more information on the assets expanding users' knowledge of
cryptos.

5. INVESTMENT OPPORTUNITY
Cryptocurrencies have proven themselves to be investment
opportunities with high returns. Investors, therefore, take a
signi icant interest in the sector, and with the increased
knowledge, most of the population follows. This increased
investment activity contributes to the growth of the industry.

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REVENUE STATISTICS
The below graphs and charts show the current revenue generated by
cryptocurrency in India and the predicted generation of revenue till
2027 in USD.

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CRYPTOCURRENCY
TAX IN INDIA
Tax on cryptocurrency is one of the most confusing aspects
in India. Initially, there was no Income Tax Act or Goods and
Services Tax (GST) de ned cryptocurrencies in India. In the
recent Union Budget 2022 outcome, the Finance Minister
presented a tax regime for virtual or digital assets that
include cryptocurrencies.

• Cryptocurrency investors are required to report the

calculated pro ts and losses as a part of their income.
• A 30% tax will be charged on the earnings from the
transfer of digital assets that include cryptocurrencies,
NFTs, etc.
• Just the cost of acquisition and no deduction will be
permitted while reporting earnings from the transfer of
virtual assets.
• A 1% deduction of tax deducted at source (TDS) on the
buyer’s payment if it crosses the threshold limit.
• If cryptocurrency is received as a gift or transferred it is
subjected to tax at the giftee’s end.
• If you face any loss from the virtual asset investment, it
cannot be balanced against other income.

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 CRYPTOCURRENCY
BILL: THE ROAD
AHEAD
The Cryptocurrency Bill 2021, is a legislative initiative that was
introduced in the Lok Sabha by the government to regulate the
thriving market of cryptocurrency in India. The industry has seen
a rush in investment in the last few years, especially during the
covid period not just domestically but also internationally.

Crypto trading platforms like WazirX, CoinDCX, Zebpay, etc. in

India are witnessing a big leap in volumes. An unregulated
crypto market is unfavorable and risky even when the
government wants to protect young entrepreneurs and investors.
By introducing the Cryptocurrency Bill in 2021, the government
of cially took a step toward regulating cryptocurrency. The bill
seeks to create a favorable structure for the creation of the
of cial digital currency that will be issued by the Reserve Bank
Of India (RBI). It also prohibits all other private cryptocurrencies
but, with certain exceptions to boost the underlying technology
of cryptocurrency. In the Union Budget of 2022, the government
already took the step of imposing a 30% tax and 1% TDS on
gains from virtual digital assets or cryptocurrencies.

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 IMPACT OF CRYPTO ON
TRADITIONAL BANKING
Digital currencies have the potential to greatly impact
traditional banking. One of the most signi icant ways is by
providing an alternative to traditional banking systems,
which could lead to a decrease in the need for traditional
banks.

Digital currencies allow for peer to peer payment app

transactions without the need for intermediaries such as
banks. This could lead to lower transaction fees and
faster, more e icient transactions.

CHANGES TO FINANCIAL INSTITUTIONS'

BUSINESS MODELS
The rise of digital currencies has the potential to
signi icantly disrupt traditional banking business models.
Digital currencies operate on decentralized systems,
which do not rely on the intermediation of inancial
institutions and can be done through various digital
payment apps.

This could lead to disintermediation, where financial

institutions are removed from the process of intermediating

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transactions. This could also lead to a reduction in revenue
for traditional banks, as they would no longer be able to
charge fees for services such as currency exchange and
international money transfers.

EFFECTS ON CONSUMER BEHAVIOR AND

TRANSACTION PROCESSES
The use of digital currencies could lead to changes in
consumer behaviour and transaction processes. Digital
currencies allow for faster, cheaper, and more secure
transactions, which could lead to increased adoption by
consumers.

This could also lead to changes in the way transactions

are processed, as digital currencies operate on
decentralized systems, which do not rely on the
intermediation of inancial institutions.

BOOSTING CROSS-BORDER TRANSACTIONS

Digital currencies and other innovations in payment systems,
such as mobile money and blockchain technology, have the
potential to revolutionize the way we make transactions.

They offer the possibility of faster, cheaper, and more

efficient domestic and cross-border transactions, making it
easier for people to access financial services and participate
in the global economy.

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For example, by using digital currencies, people living in
remote or rural areas, who may not have access to
traditional banking services, can now easily transfer money
to relatives or make payments for goods and services via
digital banking. Thus, financial technologies like digital
currencies are transforming international remittances.

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THANK YOU

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