Cryptocurrencies such as Bitcoin and Ether tumbled sharply after Russia began its invasion of Ukraine.
The price of Bitcoin, the world's most valuable cryptocurrency, fell over 8% to under $35,000 on Thursday, its lowest level in a month, according to Coindesk data. Ether, the world's second largest crypto, plummeted more than 12% and was trading at $2,304.18 at 1:04 pm IST.
The drop in crypto comes as global equity markets plunged following Russia's invasion of Ukraine.
In India, the Union Budget 2022-23 had proposed a hefty 30% tax on all profits from digital assets and a 1% TDS on all transactions involving such assets from April 1, 2022. Any losses from sale of digital assets cannot be offset against other income, the Budget had proposed.
Finance Minister Nirmala Sitharaman clarified that banning or not banning cryptocurrencies in India will come subsequently after consultations. Replying to a question in the Rajya Sabha, the finance minister clarified that taxing crypto income does not mean that the government is legalising cryptocurrency. "Not doing anything to legalise or ban cryptocurrencies," she said while talking about the government's decision to levy 30% tax on gains from virtual assets.
Meanwhile, the Reserve Bank of India has maintained its stance, calling for a ban on crypto.
Earlier this month, RBI deputy governor T Rabi Shankar called for a ban on cryptocurrencies in the country, terming it "perhaps the most advisable choice open to India". He went on to state that the arguments in favour of regulating cryptocurrencies do not stand up to basic scrutiny.
"We have also seen that cryptocurrencies are not amenable to definition as a currency, asset or commodity; they have no underlying cash flows, they have no intrinsic value; that they are akin to ponzi schemes, and may even be worse. These should be reason enough to keep them away from the formal financial system," Shankar had said.
According to blockchain-tracking firm Chainalysis, individuals and groups based in Russia — some of whom have been sanctioned by the United States in recent years — account for a disproportionate share of activity in several forms of cryptocurrency-based crime.
Chainalysis estimates that roughly 74% of ransomware revenue in 2021 — over $400 million worth of cryptocurrency — went to entities that are highly likely to be affiliated with Russia in some way.