India Crypto: India’s position on cryptocurrency confirmed by global trends
Last week, it was reported that the Singapore-based crypto hedge fund Three Arrows Capital (3AC), by various media sources, was in trouble. It is one of the high-profile crypto-investment companies that has run into difficulties recently as the valuation of the crypto market plummeted.
It has fallen by about a third since it reached its peak sometime in November last year.
In the latest sign of the impact of the downturn in the crypto market, both Bloomberg and Reuters quoted sources as saying that 3AC has gone into liquidation after failing to make payments on a loan of 15,250 bitcoin (approximately 324 million USD) and USD 350 million worth USDC , and stablecoin.
Reuters reported that its sources said that a court in the British Virgin Islands, where 3AC’s funds are incorporated, issued the liquidation order on 27 June. The commercial court there orders a company to be liquidated if it is considered insolvent because it cannot pay its debts.
It is less common for companies to wind up voluntarily.
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3AC, one of crypto’s most famous hedge funds, was founded by former Credit Suisse traders Zhu Su, a Singaporean, and Kyle Davies at the kitchen table in their apartment in 2012. Zhu predicted the bottom of the last crypto cycle in December 2018 when bitcoin was worth around 3850 dollars.
According to the blockchain analysis company Nansen, the blockchain portfolio was once worth close to 10 billion dollars.
To add insult to injury, the Central Bank of Singapore (MAS) last week reprimanded the Central Bank of Singapore for violating financial regulations.
On the other hand, Indian regulators had tried to ban cryptocurrencies only to be overthrown by the Supreme Court.
To curb crypto trading, a withholding tax of one percent (TDS) on crypto transactions was withdrawn on 1 July. The TDS liability of 1% is the second major provision in India’s recently introduced cryptocurrency tax law after a capital gains tax of 30% on all transactions came into force on 1 April.
India’s crypto community has been in the arms of the new regulations and warned that it will have a serious negative impact on crypto trading in India, especially with the global market downturn.
Sumit Gupta, co-founder and CEO of CoinDCX, tweeted that this tax “would do more harm than good.” He said developers and entrepreneurs could flee to friendlier jurisdictions, adding that a tax rate of 30% combined with 1% TDS is “unfair”.
The Indian government has been very careful about legitimizing crypto trading. It says they tax crypto because people profit from it.
“We have warned against crypto and are looking at what has happened to the crypto market now,” Reserve Bank of India (RBI) Governor Shaktikanta Das said in a CNBC-TV18 interview earlier this year after the value of cryptocurrencies fell. He had warned of the dangers of investing in something that has no underlying value. “Our position remains very clear, it will seriously undermine the monetary, financial and macroeconomic stability of India.”
According to CoinGecko, the total market value of cryptocurrencies has shrunk by more than a third, down to around $ 930 billion from a peak of around $ 3 trillion in November 2021.
Although the crypto market has been declining this year, there is no specific reason for this. Analysts have suggested that the broader global economic situation with higher interest rates and a threatening recession, combined with investors’ lower risk appetite, has caused the decline.
This has caused various accidents in the market. Some believe a crypto winter has come. Besides 3AC, among the recent disasters are the collapse of terra USD stablecoin and sister currency luna, and liquidity problems at lenders Celsius Network and Babel Finance. Earlier, cryptocurrency lender BlockFi and prime brokerage Genesis said they recently had to liquidate one of their major counterparties. In June, Crypto giant Coinbase cut 1,100 jobs. Crypto broker Voyager Digital allegedly also the party behind the standard warning that was served on 3AC, has also been affected.
“I think given this price drop, from the all-time high of $ 68,000 to $ 20,000 now, it will probably take a while to come back. It will probably take a few months or a couple of years,” said Changpeng Zhao, founder of the world’s largest cryptocurrency exchange, Binance. , told The Guardian. He added that bitcoin could take years to recover from the recent crash.
However, other market participants remain optimistic about the future of crypto.
“What I expect from bitcoin is short-term volatility and long-term growth,” said Kiana Danial, founder of Invest Diva and author of Cryptocurrency Investing For Dummies.
PricewaterhouseCoopers’ fourth annual global cryptocurrency hedge fund report published in June showed that although the cryptocurrency market is bearish now, 35% of fund managers in their survey predicted that bitcoin will trade over $ 50,000 by the end of 2022 and a further 42% forecast that it will trade between $ 75,000 to $ 100,000 by the end of the year.
JPMorgan Chase & Co. believes that the current phase of cryptocurrency downsizing will not last much longer. In a note published on June 29, it supported this forecast by saying that it has been observed that “crypto units with the stronger balances are currently stepping in to help keep the infection at bay.” It has also been noted that venture capital financing, which is “an important source of capital for the crypto ecosystem, continued at a healthy pace in May and June.”
