Bitcoin floodgates are yet to open, Balaji Srihari on bull market and crypto regulation

Crypto regulations in India: More than a year ago, when FTX’s sudden demise bewildered entire crypto ecosystem and pushed market down hill, hardly anyone imagined that leing cryptocurrencies would be back on track, stronger than ever before. 

Today, when Bitcoin is right on brink of breaking its all-time high, Balaji Srihari, Business He of CoinSwitch Exchange, joins Republic Business to have a detailed conversation about what this Bitcoin bull run means for CoinSwitch and wider crypto ecosystem. 

From crypto regulations in country to spot Bitcoin ETF approvals in USA, Srihari shared his opinion on a variety of topics and gave us insights into how CoinSwitch secures assets of its customers. Following is conversation between CoinSwitch’s Balaji Srihari and Republic Business. 

What change have you seen in our transaction volumes, since BTC has been rising? 

Balaji Srihari: I am not saying floodgates have opened yet — more to come! But doors are definitely shaking under rush of activity. Just yesterday, 4x more users were tring on CoinSwitch platforms as compared to 2023 daily average. 

Our tring volumes surged 7x as a result. excitement is very much fueled by BTC. Our data show BTC tring volumes alone have jumped 10x. 

We feel this is only start of a bull run in crypto. A rising tide lifts all boats, and CoinSwitch users are certainly rowing merrily in this market optimism. In just last two weeks, number of users in profit has increased by over 80 per cent.

What is your opinion on current taxation on cryptocurrencies in India? 

Balaji Srihari:  government introduced tax regulations for Virtual Digital Assets (VDA) during 2022 Budget session, aiming to provide clarity on ir taxation under Income Tax Act. While this move was welcomed by industry for its definition and inclusion of VDAs, certain provisions have prompted concerns among Indian users.

High Tax Deducted at Source (TDS) rates and absence of provisions for offsetting losses have compelled many Indian VDA users to seek tring opportunities on non-compliant foreign exchanges. This trend not only exposes users to risk of financial loss but also raises compliance issues with Indian tax laws, resulting in reduced tax revenues for country.

CoinSwitch, a FIU-registered platform hering to India's Know Your Customer (KYC) and Prevention of Money Laundering Act (PMLA) rules, urges Government of India to consider revising current tax framework for VDAs. Specifically, CoinSwitch proposes reducing TDS rate on VDAs from 1 per cent to 0.01 per cent, allowing for offsetting and carrying forward of losses from VDA transactions, and treating VDA income on par with or capital assets.

Implementing se changes could prompt a reevaluation of India's tax treatment of VDAs, aligning it more closely with international standards and mitigating existing tax arbitrage. 

Do you think that after US SEC’s approval of spot Bitcoin ETFs, more regulatory approvals will follow in or countries?

Balaji Srihari:  approval of Bitcoin (BTC) ETF stands as a pivotal moment for crypto investors worldwide, a significant step towards legitimising BTC and broer crypto market as a credible asset class. This marks beginning of easy access for retail and institutional capital to be deployed into space and will be a net positive for sector in long term. 

This will bring in a new wave of investors and so I am optimistic that regulators across geographies will see VDA projects in a positive light. 

What do you think about that and overall crypto regulatory landscape of India?

Balaji Srihari: In my view, it's reasonable that regulators and government bodies are taking ir time and implementing rigorous measures for Virtual Digital Asset (VDA) platforms. crypto industry's history of dishonest players running questionable operations poses a constant threat to user safety. refore, India's cautious approach to defining and implementing crypto regulations is crucial for safeguarding user interests.

However, re has been a positive shift in narrative over years – moving from a stance of 'banning crypto' to 'regulating crypto.' This shift indicates a growing acceptance of crypto assets in country. From vertising Standards Council of India's (ASCI) guidelines standardising vertising practices for crypto assets to Prevention of Money Laundering Act (PMLA) notification designating Indian exchanges like CoinSwitch as reporting entities under Financial Intelligence Unit (FIU), regulatory landscape is evolving in right direction.

Even during India's G20 presidency, re has been a strong emphasis on crypto assets. As an ecosystem, we may take our time, but we are poised to emerge as a more recognised and trusted industry. 

Tell us more about how CoinSwitch secures assets of your customers.

Balaji Srihari:  security of user funds and personal data is a top priority at CoinSwitch. To guarantee security of user accounts and transactions, we apply industry-standard security procedures- we are also SOC2 compliant. ditionally, our Proof of Reserves furr establishes transparency and verifiability of our assets.

We apply extensive checks and guardrails to ensure users’ investments are safe and secure. 

How CoinSwitch is different from rest of its competitors in Indian market?

Balaji Srihari: CoinSwitch is India’s largest crypto tring platform with over 19 million registered users. We aim to provide a simplified crypto tring experience, while also ensuring user safety. Supporting our mission are some of most reputed blue-chip investors including Andreessen Horowitz (a16z), Tiger Global, Peak XV Partners (Sequoia Capital India), Ribbit Capital, and ors. 

CoinSwitch caters to both retail investors and vanced trers.  CoinSwitch app is built to make crypto investing as easy as ordering food online, just as our retail users want it to be.