India and Pakistan see dampened crypto activity

India and Pakistan see dampened crypto activity

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From a crypto brain-drain in India to Pakistan fighting for financial aid, neither country can take full advantage of the positive crypto adoption taking place in other parts of Asia.

Positive Asian adoption

A report published by Messari on 21 September highlights the “steady” crypto adoption in South Asia, and the “soaring” adoption of digital assets in the Southeast.

The Messari report stated that Central and Southern Asia and Oceania (CSAO) is the third largest cryptocurrency market in the world, with countries receiving $932 billion in crypto value from July 2021 to June 2022.

India hampered by large crypto taxes

Even though India leads the Messari index for this region, with $172 billion received in crypto value for the same time period as above, this year’s April 1st implementation of a 30% tax on all crypto gains plus a 1% deduction at source on every single transaction has led to an Indian “brain drain” to other countries such as Singapore and Dubai.

The report quotes Vikram Rangala, director of Indian exchange ZebPay, who attempts to see things from the government perspective:

"From the conversations I and my colleagues have had, people in the Indian government, including members of parliament, aren’t anti-crypto per se. Some are very pro-crypto. But they’re worried about their constituents trading a volatile asset without adequate information. A 25-year-old saving to get married or provide for his family might trade some meme coin and get wiped out. No public servant can be seen backing something that’s so risky for most people. Rich people can survive such losses, but a house cleaner, farmer, or rickshaw driver cannot." 

Rangala does however maintain that Indian crypto innovation has continued unabated.

Pakistan ban changes to debate

In Pakistan, the situation is also not the best. A ban on crypto was recommended by the central bank and government in January of this year, but since then three sub-committees have been formed in which to debate and make proposals on the future of crypto in the country.

It does not help that Pakistan is on the “grey list” of the Financial Action Task Force (FATF) and that it is fighting to get access to financial aid. A positive view of cryptocurrencies would not go down well with the FATF.

According to the Messari chart on crypto activity in the top five regions, Pakistan has the largest percentage of stablecoins being traded compared with other types of cryptocurrencies. This runs contrary to the view of the State Bank Governor Reza Baqir, who said in relation to cryptocurrencies that potential risks “far outweigh the benefits”.

However, according to Rangala, crypto may well find a way:

“After watching Venezuela and Argentina, I think that anybody who’s in a country where things are not that stable, they’re starting to see cryptocurrency as a possibility.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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