Cryptos to buy: Cryptocurrency investors rush to ‘blue chip’ coins amid volatility

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Mumbai: Even as uncertainty over India’s cryptocurrency future persists, investors are moving away from riskier bets and pouring money into blue chip cryptos such as Bitcoin, Ether and Cardano.

All three cryptocurrencies have seen increased volumes on Indian exchanges over the past few weeks and peaked on Thursday and early Friday, according to industry trackers.

“Transaction volumes in terms of quantity have increased for Bitcoin and Ether as there have been some price corrections. Our platform attracts infrequent traders and holders. This has also held true during periods of correction,” said Sathvik Vishwanath, co-founder and CEO of Unocoin, a cryptocurrency exchange.

“We have seen an expected shift in investor behavior from riskier cryptos to industry blue chips. The past month can look like a bear market. And bear markets really separate settlers from tourists. However, those who had recently joined the crypto investment journey seemed to be restless,” said Edul Patel, CEO and co-founder of Mudrex, a cryptocurrency exchange.

Major cryptocurrencies have seen a steady decline over the past week due to volatility issues.

“The majority of investors are holding onto their previous positions and there has been exceptional growth in the number of users choosing to buy the dip,” said Shivam Thakral, CEO of cryptocurrency exchange BuyUcoin.

Many investors fear that the government may impose tax regulations around cryptocurrencies and this could only erase the remaining gains.

The government planned to define cryptocurrencies as a commodity in the new bill which also proposes to compartmentalize virtual currencies based on their use cases.

“There is no preparation for the bill; the government is waiting for US policies to take shape, which is expected in the next 2-3 months. After the United States publishes its policies on crypto, India should decide on the way forward,” said one of the people familiar with the development.

Currently, there is no clarity on either direct taxes or indirect taxes when it comes to cryptocurrencies. This is mainly because it is not defined as a currency, asset, commodity or service either.

Additionally, it is unclear whether gains from cryptocurrencies should be treated as capital gains or business income. Capital gains – long-term capital gains and short-term capital gains – are subject to lower tax rates depending on the asset.

This change should be accompanied by another set to target crypto investors.

The government plans to change current income tax and disclosure standards in the next budget to include “cryptocurrency,” ET first reported on Dec. 4.

The government wants to capture cryptocurrency revenue and investment inside and outside India, two people with knowledge of the development have said.

The government will amend Section 26A of the Income Tax Act or the Annual Information Regulations (LAR). The AIR tends to display data on all investments made by a taxpayer and is often referred to as a “tax book”.

Industry trackers say that once such an amendment is made to the income tax law, the tax authorities can request a detailed list of transactions made by individuals through banking channels.

The government is also looking to change the Foreign Asset Disclosure Standards, which will require Indians to disclose if they hold cryptocurrencies outside India, ET reported.

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