Cryptocurrency exchanges deny any panic selling due to ban fears

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The possible ban on cryptocurrencies has not created panic among crypto investors who continue to hold on to virtual currencies. The Cryptocurrency Bill is scheduled to be tabled in Parliament, which may provide for banning of private cryptocurrencies.

Experts said the bill will bring clarity on the status of cryptocurrencies in India, which are currently not illegal but at the same time not recognised by the law.

“We don’t see any significant selling at this point of time, in fact recently our volumes have increased by 2 times. We saw some selling around 1st February when the Bill was listed in the Parliament but since then the general sentiments are all good. We don’t see any panic selling. The bill will come when it will come,” said Sathvik Vishwanath, CEO and co-founder, Unocoin, a cryptocurrency exchange.

Virtual currencies have been the flavor of season, and have given stupendous return over the last year. Consider this Bitcoin has given the return of 420% over the last one year. Similarly, Ethereum and Litecoin has given the return of 511% and 138%, respectively. Tthere are around 10 million crypto investors in India with the daily turnover of around $100 million.

“Our average trading volume quadrupled from last December to February. In fact, in late January we had our highest volume trading day of all time,” said Vikram Rangala, Chief Marketing Officer at ZebPay.

He adds, “There was an increase in selling activity for the first few days after the crypto bill listing. After that the buyers returned, in fact we continued to have high volumes of both buying and selling. While the bill is certainly on people’s minds and it may be deterring some potential new investors, there is also a lot of news that makes people more comfortable and enthusiastic about crypto assets. Companies like Tesla, Square, and Mastercard are buying bitcoin and expanding their crypto services. Even the SBI has adopted JP Morgan’s blockchain-based payment system. The message this sends is: trusted brands trust crypto.”

There are also tax fears among investors. Currently, the Income Tax Law does not mention about cryptocurrencies and therefore there is no clarity about its tax treatment. There is a divided opinion on whether it should be taxable as capital gain or Income from other sources.

If treated as capital asset any gain on investments can be classified as long term if held for more than three years and short term if held for less than three years.

While long term is taxable at 20% post-indexation, short term capital gain is clubbed with your income and taxed according to your tax slab. When treated as Income from other sources, the gains are added in your gross income and taxed as per your tax slab.