2024 and beyond: What does the future of cryptocurrencies look like?

In less than 15 days, the world will witness Bitcoin's fourth halving event. With this, Bitcoin's supply growth will be halved, increasing the already comfortable crypto price. The year 2024 has been good so far for the ecosystem with BTC ETF approval and Bitcoin touching all-time highs.

While the world moves towards becoming a Web3 citizen, India is looking for government-friendly steps. The ecosystem was optimistic about TDS review during the Budget but it went in vain. “We are having discussions with the government at various levels, trying to explain to them why these taxes are really counterproductive to what the government is trying to achieve, what the industry is trying to achieve. And why it is killing innovation in India,” shares Avinash Shekhar, CEO and Co-Founder of Pi42.

During the Union Budget 2022, the government imposed one per cent TDS (tax deducted at source) on purchase and sale of VDA under section 194S of the Income Tax Act, 1961. In March, Union Finance Minister Nirmala Sitharaman announced the government. Taking a clear stance on crypto, he said, “We have still not regulated them. But they cannot be currencies, as I have always believed, and that is the position of the Indian government. Currencies are issued out of fear of the government or the Centre. If banks are to be made, then it is a different story.” However, India raised concerns at the G20 and hoped that a framework would be implemented.

But Mudrex's Edul Patel believes there is another reason why traders are choosing to move out, “TDS is one of the reasons why a lot of traders move out. But in reality, a lot of users are just looking for the service and “The quality of the product is also better. The real way to bring users back is to give them a high-quality product and service experience.” Since February 2022, more than 3-5 million Indian users have shifted their base to offshore platforms.

Operating in the crypto ecosystem has its own advantages and challenges. As of H12022, the total number of Web3 startups in India is 450+. “Innovation is one part of it and validity is the other part of it. So while you innovate, create amazing products, please remain compliant,” says Anuj Kumar Garg, Vice President – ​​Blockchain, Zebpay. India issued show cause notices to Binance and 8 other crypto platforms for non-compliance with anti-money laundering law from December 2023. Apple and Google also followed suit and withdrew at least three from their platforms.

There are over 19 million crypto investors in India. Talking about whether there are different trends compared to South Asia and India, Jyotsna Hirdani, Head of South Asia at Bitgate, says, “I think there are some fundamental differences overall in Indian user behavior versus Asian user behavior “For example, Indian users are very risk averse.” Last year, most of the crypto investors in the country were in the age group of 18-25 (45 percent) and 26-35 (34 percent).

While ecosystem players are expecting positive steps in the interim budget, Unocoin Founder and CEO Satvik Vishwanath feels that while the government is specifically demanding more taxes and higher TDS, what are they getting in return ? “People make comparisons to gambling taxes where it's very hard to educate people or make them understand that crypto taxation is different from gaming. And as we know, crypto taxation has been very challenging. So I believe That there should be something significant or some competitive taxation rules,” shares Rahul Bhadoria, Founder and CEO, ESP Softtech and Co-Founder, Mr. Mint.

So, where can we expect crypto to be in the next 5-10 years? Saurav Raj, founder and CEO of Tokenize, believes that since India is the center of financial innovation, “I mean, UPI and everything that has happened, we are way ahead of the world in that sense. And I believe “The biggest crypto innovations, or Web Three innovations, will also come from India.” He further explains that when you put these two together and take it to different asset classes such as asset trading and the trading of unlisted startups, you can create a huge innovation opportunity for everyone. “We will see a lot of global companies setting up in India that are solving problems for users in this space, which are not necessarily just exchanges or trading platforms, but real use cases,” says Patel.

Shekhar thinks that crypto and blockchain will be bigger than the internet at its peak in the next five to ten years.

“We were expecting an uptick in the next year, but it seems to have started a little earlier,” Dr Vishwanath concluded. Currently, Bitcoin trades at over US$70,000 and is expected to cross US$100,000 this year, while Ethereum sits at a little over US$3,600.