During the Union Budget 2023 speech, Finance Minister Nirmala Sitharaman made no specific announcements or changes to regulations on crypto assets, classified as Virtual Digital Assets (VDAs) in India.

With the lack of changes to crypto regulations, existing policy decisions (made during last year’s budget) will likely still stand.

As such, crypto assets will likely continue to be classified as virtual digital assets, with income from their transfers being taxed at 30%. In addition, an additional 1% tax will be deducted at source on all VDA transactions. Finally, any loss from the VDA transfer could not be offset by any other income.

These policies have led Indian crypto firms to suffer declines in trading volumes and transaction revenue, which may continue into the next year.

In the previous year, Indian crypto exchanges including WazirX, CoinDCX and CoinSwitch, lost an important part of the trade volumes to international exchanges as Binance Y coin baseThey do not have to comply with India’s specific cryptographic standards.

In fact, Indian exchanges lost $3.8 billion between February and October 2022 on forex trading, according to a report by the think tank. Now. He added that Binance and Coinbase had 67.6% of the volumes in India, up from 50% in November 2021.

In the run up to the Budget, the Indian crypto and Web3 sector called for improvements to last year’s regulations. The sector believed that more progressive regulations could revive financial activity and innovation around blockchain technology.

Web3 and crypto industry leaders had called for the classification of VDAs as a regulated asset class, the repeal of the 1% TDS rule, and the ability to offset or pass through losses on VDAs.

Some even advocated that VDAs be classified as a separate asset class, with tax blocks and compensation benefits similar to those applied to securities.

It seems their recommendations have gone unheeded, even as the Indian government tests its Central Bank Digital Currency (CBDC) project, which it may consider an alternative to cryptocurrencies.

In the India Economy Survey 2022-23 released yesterday, it was noted that India, through its CBDC, hopes to significantly boost digital financial services and provide the public with “the uses that any private virtual currency can provide, without the associated risks.” “.

There were also no steps taken to actively ban crypto investments and use, despite the Reserve Bank of India reiterating its stance against crypto assets.

RBI Governor Shaktikanta Das recently pushed for a cryptocurrency ban, adding that he believes crypto assets have no underlying value.