Cryptocurrencies Soar Under Trump, But India’s Approach Draws Criticism
As bitcoin reaches unprecedented heights under a Trump administration contemplating a government bitcoin reserve, India finds itself sidelined in the global cryptocurrency revolution. The leading digital asset surpassed $97,000 on Thursday, nearly tripling its value in a year. Yet, Indian investors face stringent tax policies, including a flat 30% tax on profits and a 1% tax deducted at source, dampening enthusiasm.
This taxation mirrors the Indian government’s wariness toward cryptocurrencies and blockchain technology, which underpins these digital assets. Blockchain, a decentralized and secure ledger of transactions, has applications far beyond cryptocurrencies, such as tamper-proof voting systems and transparent supply chains. Despite its transformative potential, India remains hesitant to embrace the technology, focusing instead on restrictive measures.
Global Leaders Embrace Crypto While India Hesitates
Unlike India, countries like the United States and Singapore have taken more balanced approaches. The US regulates cryptocurrencies as securities, fostering innovation while managing risks. With Trump’s pro-crypto stance, the idea of bitcoin as a strategic national asset is gaining traction. Similarly, Singapore has implemented forward-thinking regulations, making it a hub for blockchain innovation. In stark contrast, India’s strict policies have led to major exchanges, such as Coinbase, barring Indian users from purchasing cryptocurrencies.
“India’s stance is reminiscent of a nanny state,” remarked veteran investor Krishna Jha. “It’s ironic that the government restricts crypto while allowing riskier instruments like derivatives and futures.”
Policy expert Tanuj Bhojwani highlights the speculative nature of cryptocurrencies, noting that trends such as NFTs and crypto gaming thrive in bull markets but collapse during downturns. However, he argues that volatility alone doesn’t justify the government’s hostility.
The Rise of CBDCs and India’s Narrow Focus
India’s alternative to cryptocurrencies lies in Central Bank Digital Currencies (CBDCs). These digital versions of fiat currency, regulated by central banks, promise the efficiency of digital payments combined with traditional stability. The Reserve Bank of India is piloting a digital rupee, positioning it as a secure alternative to decentralized assets like bitcoin.
While CBDCs offer centralized control, cryptocurrencies champion decentralization and financial autonomy. Experts argue that the two are not mutually exclusive, and both can coexist in a modern financial ecosystem.
The government’s narrow focus on taxes and restrictive policies risks stifling innovation. “Smart nations don’t smother new technologies; they learn from them,” Jha emphasized.
Blockchain and NFTs: India’s Missed Opportunity
Beyond cryptocurrencies, blockchain technology powers innovations like NFTs, or non-fungible tokens. Unlike cryptocurrencies, NFTs are unique digital assets representing ownership of items ranging from art to real estate. Their speculative popularity, linked to market cycles, highlights blockchain’s broader potential, which India has yet to fully explore.
Without a balanced regulatory framework, India may squander its chance to lead in this transformative era. The future of finance, driven by blockchain and digital assets, is already unfolding. Whether India chooses to participate or remain on the sidelines will shape its economic trajectory in the years to come.
