Zerodha’s Nithin Kamath says it’s ready to offer crypto if…

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Zerodha co-founder and chief executive Nithin Kamath said on Tuesday that his company will offer crypto whenever “SEBI gives its blessing.” Kamath’s comments came after India decided to impose a 30% tax on income from cryptocurrencies and other digital assets.

“The 30% tax with no ability to offset losses with other tokens or deductions may lead to lower revenue,” the CEO of Zerodha said.

The good news for crypto, he said, is that it has finally been recognized in the budget. But that doesn’t mean it’s legal, Kamath said, adding that it won’t be legal until after the crypto bill.

“Until then, regulated entities in India cannot offer crypto trading,” he said.

The boss of Zerodha further stated, “Market markers and active traders typically account for 80%+ of turnover in most trading ventures. If the costs cannot be shown as an expense, the losses can escalate quickly.”

He also said that crypto will be treated as an asset and not a currency. “If it’s not a currency, it loses its primary use case. Whenever the crypto bill comes, I guess they will want to demarcate Indian crypto to restrict capital flows out of India,” Kamath said.

Will crypto be treated like stocks?

The head of Zerodha said that cryptocurrencies would potentially be treated like stocks. “They will likely need to be held in a demat equivalent overseen by a regulated entity,” he said.

He added, “If that happens, crypto will be centralized and lose its next big advantage.”

Kamath added, “If crypto prices don’t continue to rise like the last 2 years, I don’t see how current adoption rates will hold up, assuming some of what I said to become true.”

However, the crypto ecosystem has welcomed Union Finance Minister Nirmala Sitharaman’s proposal for a 30% tax on digital assets to legitimize betting on assets considered high risk by the RBI, even as a law regulating this activity is awaited.

In his budget speech, Sitharaman proposed taxing income generated from the sale of any digital asset without any deductions, amid a growing proliferation of assets like bitcoin, even though the regulatory framework around them remains unclear.

What are digital currencies?

Crypto or digital currencies are the latest craze across the globe and India will have next fiscal year, starting April 1, its own version of the same which would basically mirror physical currency prevalent in digital form.

The currency, called “digital rupee”, will be issued by the Reserve Bank in digital form and will be fungible with physical currency.

The exact regulations governing this central bank digital currency (CBDC) are yet to be finalized.

CBDC is a digital or virtual currency, but it is not comparable to the private virtual currencies or cryptocurrency that have proliferated over the past decade. Private virtual currencies do not represent any person’s debt or liability because there is no issuer. It is not money and certainly not currency.

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