India’s Crypto Landscape Under Review Amid Regulatory Changes
India’s cryptocurrency sector is experiencing a surge of reactions as reports indicate that the government is reevaluating its approach to digital assets. With global regulatory frameworks for cryptocurrencies gaining traction, Indian policymakers seem to be taking a closer look at their strategy. This reassessment is fueled by concerns that without clear regulations, India risks lagging behind in the burgeoning fields of cryptocurrency and Web3 technologies. Although the recent Budget 2025 did not provide any direct benefits for the industry, the pending discussion paper on revised regulations, which has been in the works since September of the previous year, suggests that progress may be on the horizon, according to local crypto exchanges.
Government’s Response to Global Crypto Trends
Vikram Subburaj, the CEO of Giottus, stated that the government’s reevaluation of crypto policies demonstrates its readiness to adapt to global developments and macroeconomic shifts. He noted that this review is crucial for India to avoid missing out on opportunities to become a leader in the crypto and Web3 sectors. Subburaj emphasized that strong regulations are essential not only for investor protection but also for fostering innovation within the industry. The Indian government’s decision to reconsider its crypto framework aligns with recent changes in the United States, where President Donald Trump has initiated executive orders aimed at enhancing crypto adoption and establishing a federal regulatory structure for digital assets.
India’s Position Compared to Other Economies
Sumit Gupta, Co-founder of CoinDCX, expressed optimism about the Department of Economic Affairs acknowledging global advancements in crypto regulation, particularly in areas such as international remittances. However, he pointed out that despite discussions at the G20 level, India has not yet taken definitive steps, while other significant economies have already implemented their regulatory frameworks. Gupta underscored that regions such as the European Union have rolled out the Markets in Crypto-Assets Regulation (MiCAR), South Korea has introduced the Virtual Asset User Protection Act (VAUPA), and both Hong Kong and China have established new regulations to govern crypto activities.
The Urgency for Regulatory Action in India
Gupta highlighted that countries like Brazil, Turkey, and the UK have also enacted comprehensive regulations for the crypto sector, leaving India as one of the few major economies yet to make significant progress. He argued that the rapidly evolving nature of the crypto industry, coupled with swift technological advancements, should not justify a lack of regulatory action. In fact, India has ranked high in global cryptocurrency adoption for the second consecutive year, particularly in the usage of both centralized exchanges and decentralized finance (DeFi) assets, making a reevaluation of its regulatory measures increasingly urgent.
Potential Shift in Government Stance
Sathvik Vishwanath, Co-founder and CEO of Unocoin, believes the government may gradually reconsider its position as the global crypto landscape continues to expand. He described the current approach as cautious but suggested that if industry stakeholders advocate for clearer regulations and improved tax frameworks, a shift in policy could be possible. Vishwanath emphasized the importance of balancing innovation with investor protection, indicating that the government’s stance may evolve as the demand for crypto becomes more pronounced.
Stricter Compliance and Reporting Requirements
In the meantime, the government has tightened compliance obligations related to cryptocurrency. Finance Minister Nirmala Sitharaman proposed amendments to the Income Tax Act, requiring entities, including crypto exchanges, to report transaction details involving crypto assets. The proposed changes also include defining “virtual digital assets” (VDA) as undisclosed income during a specified block period. Sonu Jain, Chief Risk and Compliance Officer at 9Point Capital, noted that these amendments, particularly the requirement for exchanges to report trading details under section 285BAA, align with the OECD’s Common Reporting Framework (CARF) aimed at combating global tax evasion associated with digital assets.
Concerns Over Overregulation
While these developments may enhance tax compliance, Thangapandi Durai, CEO of Koinpark, warned that treating all cryptocurrency holdings as undisclosed income without differentiating between active traders, long-term investors, and casual users could lead to excessive regulatory burdens. Durai cautioned that high taxation and stringent reporting requirements might drive capital away from domestic exchanges, thereby decreasing liquidity in local markets.
Hope for a Clearer Regulatory Future
Despite the challenges, India’s crypto industry remains hopeful that a clearer regulatory framework will soon emerge, aimed at fostering innovation while ensuring the protection of investors. Stakeholders are urging the government to take decisive action to prevent India from falling behind in the rapidly changing global digital asset arena.
