The volatility in the industry became worse when FTX, once the third-largest crypto exchange, collapsed in November and declared bankruptcy in the US. Bharat Web3 Association (BWA) said that it was due to gap in corporate governance.
“The key underlying issue in the case of FTX is lacunae in corporate governance which we have witnessed in the case of traditional finance as well and have taken considerable efforts from different stakeholders. However, there is only that much that the industry can do voluntarily, which is why we have been trying to engage with the government on ensuring strong regulatory and compliance provisions, which all players can abide by,” BWA told ‘Business Standard’ in an email.
“The BWA aims to highlight the impact of the existing tax provisions such as TDS, tax on income from VDAs and not allowing carrying forward of losses on the wider industry and share its inputs on suitable amendments which can help address the concerns of the government and at the same time allow growth of this sector,” it added.
BWA was formed in November after the Internet and Mobile Association of India (IAMAI) in July disbanded the previous industry group, Blockchain and Crypto Assets Council (BACC). BWA’s members include WazirX, CoinDCX, Coinbase, Liminal, Mudrex, Polygon and Coinswitch Kuber.
“…recognition of the potential of the space and building awareness around the industry is of extreme importance. The key is education and awareness with a dedicated focus on consumer protection…,” BWA said.
Union Budget 2022 introduced a 30 per cent tax on the transfer of any virtual digital asset. The tax came into effect in April. From July 1, one per cent tax deductible at source (TDS) is also applicable on the transfer of these assets.
Edul Patel, chief executive officer and co-founder of crypto investment platform Mudrex, said that the TDS was “a bit too high” and it prevented active trading. This in turn led to incorrect price discovery of these assets.
“The government should allow the investors to set off a loss in one crypto asset against another,” said Patel, who was unaware of BWA’s letter to the finance ministry.