Small Town India Joins Crypto Rush Despite Taxes
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Loading... - Kalpesh Durga
- 18 Dec 2024
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Smaller towns and cities across India are rapidly becoming active participants in the cryptocurrency market, joining larger metropolitan areas where digital asset trading has been established for years. From the Patels and Shahs in Gujarat's Botad to the Bordolios and Baruas in Assam's Barbaka, a diverse array of Indians is increasingly drawn to cryptocurrencies.
A report by CoinSwitch reveals that the appeal of cryptocurrencies is particularly strong among individuals aged 35 and younger in smaller cities such as Botad, Barbaka, Jalandhar, Kanchipuram, and Patna. Balaji Srihari, VP of CoinSwitch, noted, "What was once concentrated in major metros is now quickly expanding to tier-two and tier-three cities, reflecting the growing appeal." With over 20 million crypto users in India, a significant portion of them are young investors diversifying their portfolios across various digital assets, including meme coins, Layer-1 assets like Bitcoin and Ethereum, and decentralized finance (DeFi) tokens.
Local investors are increasingly gravitating towards meme coins, which constitute about 13% of all crypto investments in the country. Among these, Dogecoin has emerged as the most popular investment, while Shiba Inu (SHIB) leads in trading volume. This trend highlights a shift in investment strategies, as individuals explore a wider range of digital assets.
Despite the growing enthusiasm for cryptocurrencies, the rush to invest comes amid stringent tax regulations. Currently, income from cryptocurrency transactions is taxed at 30%, and a 1% Tax Deducted at Source (TDS) is applied to transactions exceeding ₹50,000 annually. Additionally, the Indian government is considering further regulations for the crypto space, creating an environment of uncertainty for investors.
Recent global developments have also influenced the crypto market. Following the election of Donald Trump, who has expressed support for cryptocurrencies, and his nomination of Paul Atkins, a long-time crypto advocate, to lead the U.S. Securities and Exchange Commission (SEC), the crypto market has experienced a significant rally.
As of 2024, Bitcoin has delivered an impressive 144% return, boasting a market capitalization of $2 trillion, making it larger than silver and about a tenth of gold in terms of market value. Ashish Singhal, co-founder of CoinSwitch, remarked, "Trump's unequivocal support for Bitcoin and his pro-crypto stance has been a major positive development for the crypto sector."
The surge in cryptocurrency interest among residents of smaller towns in India reflects a broader trend of digital asset adoption, despite the challenges posed by high taxes and regulatory uncertainty. As the crypto landscape continues to evolve, the participation of these smaller communities may play a significant role in shaping the future of cryptocurrency trading in India.
