Not too long ago, the 2022 budget’s treatment of cryptocurrencies effectively left the industry in a deep crack. Anticipating the major consequences of the tax ruling on virtual assets, more than half of interested investors believed that levying such high taxes would do as well as push crypto businesses into the arms of other crypto-friendly countries. such as Dubai, Singapore, or even Thailand. Many even feared that the heavy tax on the industry would cause it to operate secretly and move any future creative layer 2 products to other countries.
I would be wrong to say that these fears have been allayed since February 1, when Nirmala Sitharaman, India’s finance minister, first proposed a flat tax rate of 30% on income from virtual assets without any exclusion or deduction. The debate is still raging. With investors divided, there is still a lot of confusion in the market about whether or not to participate in the new-age asset class, especially given the excessive volatility of crypto tokens.
I believe that even with the increase in the tax rate, the crypto market will grow.
Crypto tax is the first step in crypto regulation
When the involvement of individuals who had been left out due to the delegitimization of 2018 eventually comes to the fore, clarity in the taxation process will prove to be an important first regulatory step towards wider adoption.
Even though taxes are high, there is now greater transparency in cryptocurrency transactions than before. This transparency will undoubtedly help investors in their quantitative decision-making process, giving much-needed structure and stability to their crypto portfolios. That is to say, any positive government action at this time must be taken on the chin.
Additionally, investors can still profit from holding crypto following budget statements. As the budget statement elevated virtual assets to a new level of importance in the eyes of investors, more and more investors are turning to them to diversify. For retail investors, this is a great opportunity to start their Bitcoin journey. So it turns out that the big question is not whether to invest or not, but how to invest.
Not if, but how to invest
A crypto investment strategy is what should be top of mind for investors now.
Besides the fact that investing is a deeply personal choice and that each investor has a unique investment philosophy, time horizon and risk tolerance, it seems that investors do not need a substantial readjustment of their portfolio. following the implementation of taxation. Existing investors, for now, can continue with their previous approach while it is safer for new investors to invest in “blue-chip” crypto coins, especially in the face of Terra’s recent LUNA crash.
As long as investors focus on stable themes and robust sectors, their long-term strategy need not change at all. This is of course not good news for day traders who aim to take advantage of very short-term price movements, but an investment strategy modeled or measured by SIP is the best bet for investors at this stage. When it comes to protecting investors against treacherous market volatility, a small amount invested over time serves the best.
So, yes, crypto can be tricky and taxes are high, but higher returns are still possible – as long as investors look long-term, do their research, and focus on future trends more than holdings and assets.
(Andesh Bhatti is an angel investor and founder of Collectcent-Supply Side Advertising Platform. Views are personal.)
(To receive our electronic document daily on WhatsApp, please click here. To receive it on Telegram, please click here. We allow sharing of the PDF of the document on WhatsApp and other social media platforms.)
Posted: Sunday, May 22, 2022, 9:51 PM IST