Crypto airdrops, swaps a valuation hurdle

economictimes.indiatimes.com:

crypto crowd in India will be caught in a 'valuation' conundrum as they receive 'airdropped' coins and swap one crypto for another. Until now, almost everyone in the crypto universe has been oblivious of the need to value the virtual digital assets as free coins doled out in promotional drives by offshore entities landed up in their wallets, or when they traded a slice of their crypto holdings to own a different coin in cashless deals. Not any more. Almost every fortnight, developers and blockchain-based projects, from across the world, send out tokens, as part of marketing efforts, to crypto investors who are randomly picked from their public addresses that exist on the blockchain. Now, for local investors to cough up tax on such 'gifts' — which they are required to pay as per the new tax laws proposed in the last Union Budget — they have to first figure out the value of the free, airdropped coins.

Did you Know?

You can earn interest like bank savings account on your Bitcoin wallet

But that isn't easy. Airdropped tokens are often new coins for which a market is yet to develop and traded prices (which can be used for valuation) are not readily available. Significantly, investors have no control over airdropped cryp tocurrencies — they can't say 'no' to these digital gifts or block their wallets from accepting them. Investors may choose neither to disclose the gifts nor pay tax on them under the impression that tax authorities would not come to know but may run into problems later when they eventually sell the cryptocurrencies to generate cash. Typically, at some point, most traders or investors decide to convert the digital assets into legal tender, and that's when they leave a trail for the