Having Bull And Bear Periodically Good For Ecosystem: Punit Agarwal, KoinX
How has the crash affected the crypto space in India?
With the crash, there has been a correction. A lot of the projects that were just trying to build something or replicating some of the existing applications into the web3 did not make it. Those crashed in the market, got filtered. The bear market is where only the people who are building something good will remain.
Having bull and bear periodically is good for the ecosystem. Corrections like these help filter out some of the random projects that build on hype and motivates some people who are building for the longer run to not just look at the price.
Taxes introduced on virtual digital assets have affected trader sentiments. Do see them comfortable with the taxes over time?
Trading volumes did not just reduce because of taxations, there have been global scenarios which have brought about the drop in the volumes. This might have started with the Ukraine-Russia war, then fed reserves hike happened, and global markets fell. There have been multiple scenarios that happened back-to-back within a period of about five-to-six months which has contributed to the reduction in volumes. Taxation definitely can be one of these parameters, but not the only parameter for the reducing volumes.
Most of the crypto investors who have been investing into cryptos are already in the 30 per cent tax slab. So, I feel that people will get accustomed with the tax. I think paying taxes would not be an issue once people start making money again.
What sort of regulations can we expect in the near future in crypto?
I see taxation frameworks maturing over next few years. Beyond this, regulations can come in around the kind of tokens which can be listed on exchange. Currently, a lot of random tokens come in and people get access to buy/sell them. There needs to be some sort of filtering in terms of what type of tokens can be listed, like how the stock market listing requires companies to follow many guidelines before IPO.
People and the industry will also get mature around choosing what kind of coins to invest, and not just fall into the trap of influencers who have been talking about these coins. They will actually look at the utilities and the use cases of these coins. The third sort of regulation that can come in is around tokenization as a whole.
Also, we can expect guidelines on how cryptocurrencies can be used for cross-border payments. Currently, crypto does not have a geographic barrier and it is very easy to buy/sell cryptocurrencies from international exchanges, use decentralized wallets. But that might not be in line with the existing FEMA policy.
KoinX began its journey quite recently, How was the tax season for you?
Initially, we were looking to integrate one exchange until July as part of our roadmap. But we found that there’s no solution in the ecosystem today which allows people to file their cryptocurrency taxes. And hence, we pushed our product teams, engineering teams to not look at just one exchange, but to look at integrating with exchanges that cover majority of the Indian population. So, instead of one, we integrated six exchanges including CoinDCX, WazirX, CoinSwitch Kuber, Bitbns, and Binance.
We launched beta access of our platform around July 5, where we received more than 20,000 requests. We finally launched our product on July 25. Between July 25 to 31, KoinX saw more than six-and-a-half lakh transactions getting uploaded on to the platform. People came to our platform, they downloaded the data from different exchanges, uploaded it to our platform and then calculated their taxes. It was a short six-day journey but we saw more than six-and-a-half lakh transactions.
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