Jayant Sinha, one of India's senior politicians who helps oversee the financial evolution of the nation, told CoinDesk that the country is unlikely to bring a crypto or Web3-specific legislative bill anytime soon.
The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. Bitcoin fell roughly 5% in the past 24 hours before recovering to $42,200. Joining us now to discuss the crypto markets is Sue Gupta. He's CEO of coin de uh of coin DC X A crypto trading platform based in India. Welcomes me. Hello, Lawrence. Thank you for having me. Glad, glad to have you on. So uh we saw this little selloff. We, we've been having this, this incredible year-end rally. Is it puppet taking or is it as some of the traders that I've spoken to over the weekend have said that it, there's something amiss about this current rally, not just in Bitcoin, but in some of the ALTs like Solana and, and the like that maybe these kind of rallies don't have as strong a legs as other rallies have in the past. Yeah, honestly, I don't know, I'm not a trader. I don't know, you know, exchange trading platform. Our job is to make sure that our customers are uh you know, uh able to seamlessly trade on the platform uh with respect to current rally. To be honest, I think it's just like uh some more heat up around, you know, the talks of ETF and, and the Bitcoin Housing, which is leading to this momentum, maybe, I don't know if it's uh temporary or if it will continue uh an up trajectory. But, but I think uh at our end, what we are seeing right now is there's a lot more discussions on whatsapp groups, telegram groups, people getting more active. Uh We've seen transactions volumes also rising, uh you know, uh uh over the last 1.5 month, 1, 1.5 month. So it's good to see that after a two year of dull period. So, yeah, hopefully, I think 2024 if we zoom out and look at it from a long term perspective. Uh uh To me, it looks like it's gonna be a little more interesting than what 2023 was like. And, and we, we're coming out of a very dull period and a very tough time, but I think the uh overall um uh you know, the global uh macro uh you know, looks relatively positive about the overall space. Uh Yeah, in the long term, well, obviously in short. So in that case, you know, I was gonna ask you about your short term outlook given that the year is only three weeks left to it. Uh But you, it sounds like you, you're a little hesitant to give a uh prediction here or at least to tell us whether or not you think it'll be higher or lower from where it is currently by the end of this year. Yes. I don't know. To be honest, I would be a trader if I would know that. So I don't know how the price would be. Yeah. So I think you, you said it at an interesting vantage point to discuss with us what is going on from a crypto perspective in India. We speak so much about North America on this show, you just brought up the pending ETF applications. Of course, we talk about those potentially driving this recent uh bull run, but talk to us about what's going on in India. How are folks looking at crypto moving into 2024? Sure, absolutely. I think uh two parts one is about India as a market. Second is about the customer sentiment. Uh So talking about India as a market, I think um uh I, I believe very strongly that India is going to be one of the largest market globally uh for crypto. And we three and uh we have seen massive adoption of crypto assets in the last rally in November of 2021 when Bitcoin was all time high. And in that time, we have seen users going from half a million to around 15 million customers. Uh coin D six becoming the market leader with its sheer focus on compliance, customer protection, all of that. So from our vantage point, it clearly, uh tells us that India is picking up. India loves crypto. India wants to adopt crypto. I think there has been certain challenges from a regulatory standpoint. It's been like lots of ups and downs. Uh it's been six years since we are running Coin DC X and, and we have seen uh the entire roller coaster and, and uh, but if you take a step back and, and if we look at it holistically, I think the way things are moving in India uh is going in the positive direction. We've got uh taxation on crypto last year. Of course, it's relatively higher. But, but there is clarity around taxation. We've got a registration under the Ministry of Finance uh where all the va SPS in India, uh all the cryptic exchanges, they are supposed to register with FIU. And if, if they are offering services to Indian customers and from our uh interaction with all the government stakeholders, it comes out as there are two things that are, that are very important to them. One is around customer protection and the second is around compliances, making sure that all the laws of the lens are being followed, including AM LKY three KYC guidelines, uh CFT uh you know, uh guidelines. So all of those compliances, if they are followed, they, they are very bullish on the industry over the last one year, we have seen government of India talking about with the technology and how they are, how they want to support that. Uh but it's a complex subject and, and we have seen, uh, you know, uh I, I think there are two primary concerns that that comes out. One is around uh uh some, some of the players offering services to Indian customers but are not compliant whether in terms of taxation or in terms of AM LNKYC guidelines. So right now, India is working in terms of unifying that, making sure that any, any company which is uh servicing Indian customers has to follow a standard set of guidelines. If they are not, then that's not non compliant. So uh that's something that is uh happening right now. How, how much does it cost you to implement? Um the right, I guess procedures for compliance with AM L legislation and also compliance with the new tax requirements, especially that 1% tax deducted at source. Um that was implemented, I believe a year and a half ago. So, so I think in terms of uh uh how much it costs, I think we've been focused on compliance from day one. So we are already used to working in that style, even if it comes at loss of business, even if you know that we lose 90% of the business totally fine for us because we are building coin D six from a really, really long term point of view. Uh So, so for us, I think it's, it's a, it's, it's a good investment that we do because I think uh that continues to remain a uh remain a very strong point for us. And we want to double down on that uh uh to give you an approximate range of how much it costs for us to sort of solve compliances roughly around 10% or so of the overall company expenses. That includes the tools that includes on chain transaction monitoring, that includes doing STRS, that includes making sure that we uh do all compliances internal as, as well as external uh comply with all the government guidelines, including the sources. So I think roughly 1/10 of the cost which is typically in line with uh what we already expected as well. So it, it's, it's uh investment we see uh in terms of TD, STD S 1% is very high. Uh We've seen uh customers uh not liking that I personally am very open about it that 1% T DS is uh high and we, the government should reduce it. We have been uh doing several representations to the government uh to requesting them to reduce it. But what's happening is that uh you know, uh uh you know, we have to follow the laws of the land. So customers have to pay 1% T DS for every time they do a transaction, every time they do sell transaction. Uh It's not applicable on buying. But the good thing is it's a refundable tax. So it's not like that. If you pay one person, you'll not get it back, you will get it back, it will be adjusted with your capital gains tax. So, uh and the purpose is to, is primarily to uh know who is doing what activity in crypto transactions. Um And, and out of around 130 grows uh 1300 million of uh inr of TD that was paid 70% of that was paid by point D six in India in last uh financial year. So I think uh uh uh it's high but I think uh uh it's, it's something that government will continue to have. I think it should be much lesser, probably 0.01% or, or 0.1%. Uh customers are not like community is not happy with that. So I, I believe that uh it's something that will be looked at the right time. It's not gonna happen anytime soon because there are elections uh in the country. But what's happening in the process that all the, all the va SPS, all the crypto platform from that are servicing to Indian customers. There is obligation on them to register with the government of India Ministry of Finance and fiu and if they don't do that, then essentially uh uh you know, that's non compliance and, and it will not be uh it, it won't be sustainable for long term. So I think the first objective from the government fund is to make sure that they have full visibility of what's happening in the ecosystem and then take appropriate measures to regulate the space uh appropriately. So that, that typically is something that uh uh we are looking forward to in the next year. Are the taxes, the 30% capital gains tax on the 1% T DS that we were just speaking about deterring new users from experimenting with crypto or entering the space. Do you think? See, uh I've been in this space for almost eight years and talking to, you know, uh almost hundreds of customers every month. Uh I have not seen people moving away from crypto because of the taxation. But unfortunately, what is happening is that uh 95% of the customers are not. Uh uh so they have not stopped trading or investing in crypto, but they have either moved to Texas or, or to some of the offshore platforms uh to sort of uh continue to trade and, and that's something that uh uh uh you know, is, and we have seen it from our numbers as well. So if you look at the numbers, the interest in the activity. In fact, India is number one, when it comes to grassroots adoption, right? In terms of launch activity, you've seen it in the recent report. So India is continuing to grow just that because of high taxation, it just deters customers from trading on uh uh you know, domestic players but rather move offshore indexes. All right. And lastly, you mentioned the election coming up in 2024. Uh we also have an election coming up in 2024 and we often talk about crypto being a talking point or not being a talking point in that election. How prevalent is crypto in, in the discussions uh moving towards your election next year? See, India has roughly 30 million crypto investors and uh which is roughly, you know, 2% 2.5% of the population and, and uh with respect to elections, I've not seen crypto regulations being discussed as a common point, but we all know that 1330 million customers is not a small base. Uh It's, it's, it's uh uh pretty large and these are all young people. So they, they represent a very large uh you know, uh you know, a good set of voting uh uh cohort and, and uh I'm not sure about the elections manifesto of crypto will be covered in that. I know it's happening in the US. Uh But, but in India, I think there's been a lot more discussions among the government stakeholders around regulations. In fact, last year in the, when India had the G 20 presidency, crypto was a major agenda point. Uh So I think it's happening at that level, not uh uh uh uh uh a part of elections I would say. All right, sid, we are going to have to leave it there. Thanks so much for joining us on the show today.