Investing In Crypto? Here’s All You Need To Know

*This is in partnership with BloombergQuint Brand Studio

Crypto is now a widely accepted digital asset class in India and most new sign-ups come from investors in B and C class cities. From a macro, global perspective, the crypto market was valued at $1.49 billion in 2020 and is projected to reach USD 4.94 billion by 2030. This growth will not be driven by speculation but rather because of the critical need for greater efficiency and transparency in payment systems, the need for data security as well as an increase in demand for remittances.

The recent Union Budget brought crypto into the ambit of taxation, thus clarifying one aspect that worried some investors earlier. The Reserve Bank of India is also rolling out a digital currency in April 2022. There is a visible buzz of expectancy when it comes to crypto in India.

Crypto offers massive upside potential for the investor who takes time to understand this asset class, the risk as well as potential, and invests wisely by finding the right balance. If you are looking to invest in crypto in 2022, here’s all you need to know and make sure you read this before you invest.

First up, it’s important to understand the easiest way of investing in crypto:
1. Crypto Exchange Platforms

By far the easiest way to buy (and sell) cryptocurrency in today’s market, crypto exchange platforms have revolutionised crypto trading in the last couple of years. These platforms are 100% digital, self-regulated, and operate 24x7, allowing you to carry out trades at any time, unlike other financial markets. One of the top platforms in India is the Binance-owned WazirX, which offers various options for retail as well as corporate and HNI investors.
2. P2P Transactions

Next up, is person-to-person transactions, also known as ‘P2P’ transactions. In this scenario, you can directly transfer ownership of a digital currency to/from another party. However, this may turn out to be a lengthy process since crypto price matching is riddled with caveats and finding a buyer/seller to match your deal is no easy task. If you are an expert, you could try this.

3. Crypto-Mining

The way it all began. While some still try this approach, mining crypto is an extraordinarily complex undertaking that requires awfully expensive hardware and software, and often enough electricity to power a small city. You may be able to mine some crypto, but your power bill may leave you bankrupt. Definitely not an option for laypersons.

Next, what are the important things to keep in mind before buying crypto in India in 2022?

As things stand, a crypto exchange platform is your best bet if you want to buy and sell crypto. And this means finding the right exchange platform is crucial before investing.

Here are a few key factors to look out for when it comes to choosing a crypto exchange platform:

• Ensure that the exchange's website has a good user experience and is simple to navigate.

• Check to see if the exchange offers trading pairs, i.e., a function that represents two currencies traded for each other on an exchange.

• Before deciding on a platform to buy crypto in India, it's especially important to consider security. While there is no regulation in India around crypto investing and trading, leading exchanges like WazirX have excellent KYC norms and a high-quality of self-regulation and security based on global best practices. Avoid using exchanges that do not have a KYC system in place.

• Compare multiple trading platforms to check for trading fees; you don’t want it to be too high.

Last month, the Indian government released clarity related to taxation on crypto earnings, which will come into effect from April 1, 2022. It is important to understand these rules and how they might impact your earnings.

• Starting April 1, 2022, income tax on crypto earnings will be 30% in India, after having been classified as a Virtual Digital Asset (VDA) for taxation purposes.

• Only the cost of acquisition is allowed to calculate such income. This means no amount pertaining to any other expenditure (transaction cost, interest, etc.) is allowed to be deducted.

• The basic exemption limit of Rs 2,50,000 is not applicable on income from the transfer of crypto.

• If the VDA transfer is shown as a loss, that cannot be set off against any other income, nor will the loss be allowed to be carried forward to subsequent tax years.

Buying Crypto on WazirX

Now that you are armed with all the information you need, here’s how you can get started:

1. Create an account on WazirX via the website or app, after confirming their terms of service, verifying your details, and KYC.

2. Add funds to your WazirX account via UPI/IMPS/NEFT/RTGS.

3. Buy what you like! Interact with the WazirX dashboard, check the latest prices of different cryptocurrencies, study past trends, and make informed decisions.