Cryptos to be taxed at 30% - Will it Positively Impact Equities?

This can potentially be the highlight of this budget.

In her Budget Speech, FM has just announced Tax on cryptos and NFTs . Here’s the FM’s statement :

With phenomenal increase in transactions of virtual digital assets, we will impose a 30% tax on any income from transfer of virtual digital assets. No deductions allowed except cost of acquisition, loss cant be set off, TDS of 1%: FM Sitharaman

Will this adversely impact Equities or infact lead to higher flows into equities ?

  • Crypto bull can look at it in a postive way saying - dude, now crypto is definitely not illegal and therefore, more ppl would join the crypto party.

  • Whereas an equity guy can say - Boss, Indians are extremely sensible when it comes to taxation, paying 30% would mean more ppl will shift out of crypto and try equity which are taxed at 10-15%

TQNA folks, What is your personal take on this ? @MarginCaller @Jason_Castelino @jashjacob @Value_investor @t7support @RahulKhanna and others


I think this will lead to more inflow into Crypto. The thing with crypto is that we can put a small amount on it and then make a killing. This is a much better form of lottery if you ask me :sweat_smile:. With equities and circuit freeze limits equities cannot go up as fast as cryptos. Now with a sense of legality to Cryptos the asset class is going to be hotter.

My exposure in terms of money is really small compared to what I have put in my trading account. But that is the key. Risk is minimal with money am willing to loose. The returns if it happens will be disproportionally high.

The key differences when considering crypto vs. stocks are best viewed through the lens of the characteristics which follow.

Liquidity Issues

Liquidity is the measure of your ability to buy and sell at will in any market. Stock markets have the upper-hand in this crypto vs. stocks comparison as they posses higher trading volumes than cryptocurrency markets and, as such, are more liquid. Comparatively, the crypto market has significantly fewer active traders and, therefore, may suffer liquidity issues.

However, cryptocurrencies are not equal when considering liquidity. Bitcoin is the most liquid digital currency because it has the highest numbers of sellers and buyers willing to trade.

Low market capitalization of a cryptocurrency is a measurement of its market value. In other words, it… coins and tokens and smaller cryptocurrency exchanges normally cause liquidity issues for large investors, rendering them uninvestable and unpreferable, respectively. Similar issues are typically encountered in stock trading only when trading over-the-counter penny stocks, or working with micro-cap stock brokerages.


Purchasing shares of a stock traded on a stock market awards the buyer equity in the company. As an equity holder, the investor is entitled to various benefits, such as capital gains or losses, dividends based on profits, and shareholder voting rights. However, buying through a brokerage technically means that your broker owns the shares. Very few investors bother with trying to own shares in their names.

Buying cryptocurrencies means you can transfer ultimate ownership of the coin or token to the investor. Initially, cryptocurrencies are typically traded on an exchange and stored in an exchange wallet. However, you can transfer the cryptocurrency to a hardware device cold storage, which is generally safer than an online wallet. You don’t have to worry about an intermediary being hacked if you keep the private keys to your crypto secure.

High Volatility

One similarity when considering crypto vs. stocks is that they’re both volatile. With price fluctuations that are difficult to predict, it’s virtually impossible to determine the exact time to enter or exit a trade. That being said, the stock market allows investors and traders access to company information, which they can use to decide how to trade their securities. Furthermore, the stock market, despite regular price movements, has tended to grow over the long term.

Stock markets only fluctuate during the fixed span of a business day. Cryptocurrency markets never close, and experience fluctuations relative to other digital assets, happenings in the crypto space and the movement of global stock markets.

With the vast spectrum of influences that are present 24 hours a day, cryptocurrencies experience more volatility than stocks. More market volatility also means less stability in price, which may keep institutional investors from participating in crypto. It also means there are more entry and exit opportunities for trades, with a potentially greater scope for large gains.

Unrestricted Cryptocurrency Market

Stock markets are regulated, and margin requirements are often strict and tightly monitored. Portfolio minimums may also keep traders from using leverage.

When comparing crypto vs. stocks, cryptocurrency derivatives trading is definitely more accessible than stock market margin trading. The world’s leading derivatives exchange has a minimum deposit of just $1, making leveraged trades available with the lowest amount of funds possible. Leverage starts as low as 2×, reaching as high as 100× or more on leading digital asset exchanges.

Lack of Diversification

The purpose of diversification is to hold assets that perform differently in diverse markets. Stocks may actually offer less diversification than crypto, as they tend to follow the broader economy. Factors such as inflation and monetary and economic policies have an impact on stocks and bonds.

Bitcoin and Ethereum’s low correlation with stock market securities and assets make cryptocurrency investing an attractive strategy in portfolio diversification. The prices of cryptocurrencies largely move relative to those of coins that have stability, like BTC and ETH. Stocks and shares, on the other hand, respond to broad economic factors, the individual performance of companies and sectors, and the interconnected supply and demand of related indexes, industries and services Respectively.

Crypto vs. Stocks: Which Is the Better Short-Term Investment?

Cryptocurrency is a short-term investment that may offers the potential for large, fast gains — and equally rapid losses. With the average return on the stock market at roughly 10% per year, Bitcoin has risen as the top-performing asset of the decade with an average annual return of 230%.

Keep in mind that digital assets can shoot to the moon. It is used to describe a spike in prices. Indeed, a spike so big that it goes off the charts and goes all the way up to… within hours or crash in minutes, for instance with a pump-and-dump scheme. Not all trades yield steady returns or guaranteed gains. However, the fluctuating state of cryptocurrency markets makes them ideal for day traders looking to recognize patterns and trends and claim immediate profits.

Crypto vs. Stocks: Which Is the Better Long-Term Investment?

The stability of stock market trading is a factor that draws many long-term investors…

Besides the risk of high volatility, crypto also faces regulatory uncertainties, slow mainstream adoption and cybersecurity threats. Despite these risks, crypto can be rewarding if you make an effort to understand the market and tread carefully.

Whether investing in crypto or stocks, playing the long, steady game is the way to go. Unless you’re a day trader, it’s best to avoid the short-term volatility in either market.

The Bottom Line

Deciding which to trade when comparing crypto vs. stocks largely depends on your expertise, trading strategy and the amount of money you’re investing. Stocks are better for those who want predictable, limited investment growth over the long-term, with relatively low volatility. Cryptocurrencies are better for those who wish to diversify and seek a hedge against inflation and factors adversely affecting the financial markets.

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I believe that this is a welcome move first of all. But I still somewhere think that both the assets hold a very different set of investors. Crypto may dominate with new-age investors and in Equities, along with the new age, even traditional investors play a role.

There can be some impact seen on equities, but I would not call it adverse as the play in both the assets is different.

I wasn’t expecting this tbh. Especially since the crypto bill was not debated in the last session. With this they have given green signal to crypto-assets after blowing hot and cold over it for years. Goes out to show how much regulators themselves understand the underlying when it starts out, and take random decisions such as blanket bans one day followed by bipolar switching to earn revenue out of it.

That being said, I actually think this is a good news for Indian Crypto scene. It was actually the best in the world around 2016, but then due to the mercurial behaviour of regulators we lost that spot. As for the taxation part. The crypto assets , the ones that survive, have a way higher upside than most companies. So I don’t think many would fuss over that 15% or whatever it is at that time, haircut.

is it started in india ?

do zerodha plan to start/offer crypto trading ?

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You can trade crypto derivatives on any number of exchanges. Ex - DeltaExchange
You will need to fund with USDT.

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are those indian exchanges ? are they in india ?

i m surprised , we are not allowed to trade cash equity derivatives fno outside india , then , how are we allowed to trade crypto derivatives ?
Seems it is possible with .

Nope, they are not Indian exchanges. They are not in India.

There are tons of them giving derivatives. Binance also provides, OkEX provides. List goes on.

My bad , i don’t know about this.

Not sure if I the right person to comment on anything related to crypto since I have no exposure to these assets.
From taxation point of view now there is clarity. Earlier people used to treat it differently at thier convenience.
Some considered digital asset to be a capital assets and showed it under capital gain. Other showed it as businesss income or IFOS. Even loss was set off against other income.
Now income from crypto will be directly taxed at 30 percent and loss cannot be set off against other heads.

any idea about the optons volume in crypto ?

Depends on the exchange. Delta seems decent, Binance too.

30% tax is fine. But there is a catch. Govt will add 1% TDS on each sell call execution above 10k. So every time you buy from someone or you sell to someone, the value of the asset will get reduced by 1%. So it is a big negative for sure. The party is over it seems.

This is a good trend for the cryptocurrency world

This just accelerates move towards crypto and decline of fiat.

Why would they convert cryptocurrencies back to fiat? They get paid in crypto which is great and probably stick to that as it appreciates with time. Government can’t tell the difference if they are invested in crypto or using it as medium of exchange. Instead of converting it back into fiat and paying 30% tax they are probably going to use crypto directly in market to purchase things, some might change to stable coins. So where is govt even going to get 30% tax? :rofl:.
You can migrate your crypto in other wallets and use it online. With No KYC, No PAN and wallet with gibberish address govt’s can’t do anything.

And how exactly govt is going to track 1% TDS in P2P, its all very ridiculous.

Retailers just want to chase high returns without caring about risks associated with it.
Just like putting numerous restrictions on equity derivatives doesn’t stop them, putting restrictions on crypto won’t deter them.