The government has proposed to issue a Digital Rupee, or Central Bank Digital Currency (CBDC), in the fiscal year 2022-23. Additionally, the Budget also proposed imposing a tax for 30% on virtual assets, effectively legitimizing trading of private cryptocurrencies and non-fungible tokens. This is broadly in line with the Center plans to have a fiat digital currency, while disallowing use of private virtual coin as legal tender.

However, the range-bound market could hardly dent investor sentiments. Leading platforms like CoinSwitch Kuber continued to see a lot of action over the past week or so. And with new listings taking center stage, 2022 is all set to become a watershed year in regard to the much-anticipated crypto adoption.

But there is a catch to all this! Every year in the crypto timeline requires different strategies to succeed. Therefore, investors planning to make it big in the crypto space in 2022.

Fundamental analysis:

Knowing the coin or token better will be the theme in 2022. With new players coming up each day, knowing the tokenomics, roadmap, market cap, and utilities will significantly influence picks. And if you aren’t privacy to the concept of fundamental analysis yet, credible exchanges ensure that only verified, secure, and dependable tokens are available for you to choose from.

Technical analysis:

You can expect erratic market movements in 2022. And that’s not a prediction, but common sense. Doing your research in regard to technical analysis can help you predict the massive market movements better than others. And as it’s undervalued as a tool, technical dexterity can come across as a game-changer for the investor in you.

User Cases:

There is much more to the coin or token than the fundamentals and technical. Before investing or even HODLing a specific asset in 2022, you must DYOR regarding the real-world benefits.

Grant Thornton Budget Explainer:

Among a series of pre-Budget expectation surveys conducted by Grant Thornton Bharat for various sectors, the banking, financial services and insurance (BFS I) sector has asked the government for an increased regulatory focus around cryptocurrency and non-fungible tokens (NFTs). According to the BFS I sector’s survey, 79% respondents said they want regulations for cryptocurrencies and NFTs in the upcoming budget, indicating a growing chorus for bringing in laws to regulate the sector instead of banning cryptocurrencies. Over 1,000 respondents collectively were part of all the surveys.

“The market survey clearly demonstrates the expectation for the government to be forward-looking by focusing on initiatives around evolving risks that help strengthen stability and growth of the financial services ecosystem,” said Vivek Iyer, Partner – Financial Services Grant Thornton Bharat in the survey.

With respect to decentralized finance (DeFi) 61% of respondents said the government should suggest a regulatory sandbox approach for innovations around DeF i to learn more about it in a test environment. However, 36% of the government may not have DeFi in focus in the budget. “Market understanding of crypto is limited, and we should try to understand the domain,” the survey noted. DeFi removes third parties or intermediaries such as banks, financial companies, that enable transactions between parties in exchange for a fee. It allows people or two parties to transact with each other directly conduct financial transactions based on blockchain. 

Meanwhile, the crypto sector had also sought clarity on regulations, if announced in the budget. “From the upcoming union budget, we expect clarity in terms of how crypto transactions will get regulated. There have been many discussions going around in the crypto space; however, no concrete output so far. We expect detailed clarity on how it will be regulated and an introduction to a tax regime that would be more fruitful,” said Gaurav Dahake, CEO & Founder, Bitbns.

The government had last year said that crypto gains would be taxable as income and GST would be applicable on services by crypto exchanges. “Irrespective of the nature of business, the total income for taxation shall include all income from whatever source derived…the gains arising from the transfer of cryptocurrencies/assets is liable to tax under a head of income,” Former Minister of State for Finance Ministry Anurag Singh Thakur had said in response to a question in the Rajya Sabha in March 2021. Likewise, “supply of any service, if not specifically exempted, is taxable under GST and no service related to cryptocurrency exchange has been exempted.”

Union Budget should focus majorly on regulating the sector by classifying cryptocurrencies as an asset class for India and providing regulatory clarity in terms of tax applications for them. Furthermore, the roll-out of a comprehensive self-regulatory body or group for and of the cryptocurrency and blockchain sector players can also be considered by the government,” said Om Malviya, President, Tezos India. 

The crypto bill, which was listed for introduction in last year’s Budget session and then for the Winter session, wasn’t taken up. For the upcoming Budget session as well, the introduction of the bill doesn’t seem certain. “Last time the bill was proposed but subsequently because there were other dimensions, which in real-time, we thought were important to bring into the bill. That bill has been reworked and is now coming as a new bill. So, the intent was either we improve that bill or come with a bill that is far more recent. Once the Cabinet clears the bill, it will come into the house,” Finance Minister Nirmala Sitharaman had said during the Winter Session in Rajya Sabha. 

“It is not clear whether such assets are goods, securities or a currency; whether it is legal to hold and trade in such assets and the quantity in which such assets may be held (as under Indian foreign exchange laws a maximum remittance of $250,000 per financial year is permitted for the acquisition of capital or financial assets abroad).  Also, a few banks have been reluctant in permitting remittances or providing services for settling crypto trades. The proposed law should not only clarify all the above issues but also deal with rampant advertising and promotion of such assets as means of generating quick wealth,” said Manvinder Singh, Partner, J Sagar Associates.