The continued worldwide adoption of crypto and blockchain took another giant leap forward today with the announcement of tax implications and the issuance of CBDC’s from the Indian Ministry of Finance.

As part of the national budget for the forthcoming year, Finance Minister Nirmala Sitharaman announced any income from the transfer of ‘virtual digital assets’ is to be subject to a 30% tax. Sitharaman went on to declare that a digital Rupee would most likely be released sometime between 2022 and 2023 providing a clear sign that India is one step ahead in its proposed release of a Central Bank Digital Currency (CBDC). 

## Largest crypto market in the world.

In a long and detailed speech lasting over two hours, Ms Sitharaman said “there has been a phenomenal increase in transaction in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.”  

India is believed to have one of the largest crypto markets in the world with as many as 15 million individual crypto investors. This figure has increased significantly in recent years despite the Royal Bank of India attempting to ban cryptocurrency trading in 2018 when it ordered banks not to facilitate crypto trade. More recently, in December 2021, the RBI was still pushing for a complete ban as it believed partial restrictions would not work. Therefore, although today’s announcement from the Ministry of Finance comes somewhat out of the blue it just goes to show the growth and strength of this nascent asset class is practically unstoppable.

## Indian CBDC less than a year away?

While many countries continue to explore the issuance of a CBDC few seem to have made as much progress as India. As you may imagine China lead the pack with South Korea, Canada, and the European Union all still deep in the developmental phase. 

In a press release from April 2021, The Bank of England announced plans of a ‘CBDC Taskforce’ to explore the possibility of creating its own CBDC, a statement in the following November however indicated that any plans to release ‘Britcoin’ to the general public may not come to fruition until 2025. India is well ahead in the development and release of its CBDC and while this may sound impressive it is worth remembering that every nation has a different economic framework with associated requirements. 

Speaking of CBDC’s specifically Sitharaman said that digital currencies would be “issued using blockchain and ‘other technologies’ by the RBI starting 2022-23. This will give a big boost to the economy." 

While there was no mention of crypto per se, the Minister preferred to use the term ‘Virtual Digital Asset.’ Additionally, many crypto proponents believe that ‘other technologies’ may be a nod towards third generation consensus protocols which technically don’t use a blockchain. With such a short timeline until launch India will be sure to experience a mass scramble for legitimate and up to date information, digital and hardware wallets and as can be expected the endless search for new opportunities for revenue. Watch this space.


India to Tax All Crypto Trade by 30%

Crypto investors need to be aware of how a new US law impacts on the sector.

The $1.2 trillion infrastructure bill, recently signed by President Joe Biden, captured a lot of headlines, but not everyone noticed the measures aimed at crypto investors and exchanges.

Under the legislation ‘brokers’ (aka cryptocurrency exchanges) will have to issue a 1099-B. That means crypto exchanges will have to tell the IRS directly about crypto transactions.

Experts believe this will create tax reporting challenges for many crypto investors. For example, traders who use their own crypto wallet may find the information handed to the IRS contains inaccuracies. This is because the exchange’s reporting on trading activity will only have a limited view of what investors paid for crypto in the first place.

## What should crypto investors do?

If you want to stay on the right side of the law, and you should, then there are two major factors to consider.

Firstly, keep track of what you originally paid for your crypto, and keep it as accurate as possible, so you can reconcile your records with what the exchanges report to the IRS.

Secondly, consider finding a tax professional with crypto knowledge. This could help ensure even greater accuracy and assist you in being as transparent as possible about what cryptocurrency you hold and what you paid for it.

The IRS already considered cryptocurrency taxable property, this new reporting requirement makes it even more important for crypto investors to ensure they report activity accurately and completely.

The massive drop in value of Bitcoin and Ethereum in the hours after Biden signed the bill into law recovered slightly by mid-week.

It is thought the fall in value is more likely to relate to the general volatility of crypto rather than the new US law.

More [Business news](/news/category/crypto-business-news).

US Infrastructure Bill: Impact on Crypto

MTax authorities in Japan have been investigating tax evasion of cryptocurrency transitions. The numbers have been up for discussion as a whole lot of people have been reporting lower gains than they actually made.

The National Tax Agency has already investigated a grand total of 1600 people this year. They were checking into the claims from last tax season, according to the Nikkei Asian Review . After that, about 250 more cases will be investigated. These investigations will continue through the next year as well.

## Failing to File Means Penalties

Cryptocurrency exchanges in Japan are obligated to file user tax reports by February 15th of every year . If you fail to do so, it’s possible that you’ll face penalties or even jail time if proven guilty.

Japanese authorities carried out a large-scale investigation in the Kanto region, including cities such as Saitama, Tochigi, Gunma, Niigata and Nagano. They found that only about 20% of cryptocurrency investors reported their gains or losses on crypto assets.

This was possible through a new system where exchanges match up data supplied by users and what they actually owe to the government.

More [Business news](/news/category/crypto-business-news).

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