Trading on Speculative Future Prices: The Role of Crypto Futures Exchanges
Introducing ‘Pi42’, the latest addition to the Indian crypto landscape, launched on Wednesday, February 7. This innovative crypto-INR Futures Exchange emerges as a collaborative effort between Zebpay CEO Avinash Shekhar and WazirX founder Nischal Shetty, aiming to provide Indian users with a seamless crypto experience while circumventing the one percent TDS levied on each transaction. The platform’s debut arrives amidst a regulatory backdrop marked by the Indian finance ministry’s imposition of taxes on crypto activities two years ago. Despite persistent calls from the community for revisions to these tax laws, the government’s inaction has resulted in a stagnant growth trajectory for the sector.
At the heart of this new venture lies the concept of crypto futures trading, allowing investors to forecast the future price movements of crypto assets and capitalize on these speculative predictions. Unlike spot trading transactions, where holders engage based on current token prices and incur a one percent TDS levy per transaction, futures trading enables holders to retain assets for extended periods, awaiting the attainment of speculated price points. This approach inherently mitigates TDS-related losses, offering a more tax-efficient trading alternative.
As Nischal Shetty, co-founder of Pi42, elucidated in an official statement, “Crypto derivatives trading volumes are significantly higher than spot volumes across the globe. Futures trading comes with several advantages for investors such as better liquidity, opportunity to leverage, prospect to earn higher profits, and tax efficiency among others.” With such promising prospects, Pi42 emerges as a pivotal player in reshaping India’s crypto landscape, ushering in a new era of accessibility and efficiency for crypto enthusiasts nationwide.
In the recent months, India has strengthened its oversight over the Web3 sector. The country is gradually deploying rules to regulate the otherwise volatile sector, aiming to stabilise the industry and curb the margin for the exploitation of these virtual assets. One such mandatory rule for crypto firms is to register with India’s Financial Intelligence Unit (FIU).Pi42, as disclosed by its founders, has already been registered with the FIU – which means Indians can start trying it out.
“India is home to one of the world’s largest crypto enthusiast communities and yet we have extremely limited opportunities to explore innovations in crypto such as futures trading. We aim to infuse a new life into the industry for the modern-day investors and help them redefine financial freedom by offering tax-efficient and regulatory compliant trading options,” said Shekhar.
The Pi42 app is first rolling out for Android users in India and will soon be available for iOS users as well. In the coming months, Shetty and Shekhar aim to expand this Futures trading exchange to other international locations as well. The Indian crypto community has faced a slump in growth in the last two years. Industry leaders have blamed the tax system for pushing investors out of the circle. Before the 2024 interim budget was announced earlier this month, ‘#ReduceCryptoTax’ was trending on all major social networking platform.
Despite these urges from the industry, Finance Minister Nirmala Sitharaman did not even mention the crypto industry in her speech. Industry leaders are now waiting for changes in the finalised budget that will be presented after India’s upcoming election.