Virtual Digital Assets (VDA) Risk Disclosure
In Compliance with Global Best Practices & Indian Regulatory Standards (Finance Act 2022)
Virtual Digital Assets (cryptocurrencies, tokens, and perpetual derivatives) are highly speculative, unregulated products in many jurisdictions, and carry a substantial risk of complete capital loss. Past market performance is not indicative of future returns. You should never trade or invest money that you cannot afford to lose entirely.
1. Perpetual Futures Leverage & Forced Liquidation Risk
Perpetual futures contracts are leveraged synthetic derivatives. While leverage can magnify trading gains, it equally magnifies downside risk. In volatile market conditions, a minor adverse price movement can cause your position's margin to breach the maintenance margin threshold, triggering immediate forced liquidation.
During rapid cascade events, exchange liquidation engines may execute market orders at prices significantly worse than anticipated, potentially depleting your entire allocated margin.
2. Basis Spread Divergence & Funding Fee Decay
Perpetual futures trade with periodic 8-hour funding rate payments to tether contract prices to the spot index. Holding a leveraged perpetual position during times of aggressive market bias can incur substantial recurring funding payments that eat away your trading equity regardless of whether the underlying spot price moves.
CoinTrader’s Basis Spread and Funding Rate metrics provide real-time visibility into these imbalances to help traders evaluate cost-of-carry risk before initiating swing positions.
3. Indian Regulatory Notice & VDA Taxation Rules
Under the Indian Income Tax Act (amended by the Finance Act 2022), Virtual Digital Assets (VDAs) are subject to stringent tax treatments:
- Section 115BBH — Flat 30% Tax: Income from the transfer of any Virtual Digital Asset is taxed at a flat rate of 30% (plus applicable surcharge and 4% cess). No deduction is allowed for any expenditure or allowance except the direct cost of acquisition.
- No Set-off or Carry Forward of Losses: Losses incurred from trading or transferring one crypto asset cannot be set off against income from any other crypto asset or other income heads, nor can they be carried forward to subsequent assessment years.
- Section 194S — 1% TDS: A 1% Tax Deducted at Source (TDS) applies to consideration paid upon the transfer of VDAs exceeding statutory threshold limits (₹50,000 for specified persons, ₹10,000 for others in a financial year).
- FIU-IND Compliance: Domestic and offshore exchanges serving Indian residents are required to register with the Financial Intelligence Unit - India (FIU-IND) and enforce strict Anti-Money Laundering (AML) / Know Your Customer (KYC) reporting.
4. Informational Scope & Independence
CoinTrader (cointraders.in) is an autonomous market telemetry provider. We are not a registered broker-dealer, asset manager, exchange custodian, or SEBI-registered research analyst. All technical indicators, screener sorting orders, and divergence metrics represent mathematical models derived from public trade feeds and do not constitute an offer, recommendation, or solicitation to buy or sell any asset.
Always consult qualified tax advisors and financial fiduciaries in your jurisdiction prior to engaging in digital asset trading.