India is reevaluating its cryptocurrency stance in response to changing global attitudes. Economic Affairs Secretary Ajay Seth told Reuters that India’s review considers the changing positions of multiple jurisdictions regarding cryptocurrency usage and acceptance. This reassessment has delayed the release of a cryptocurrency discussion paper originally scheduled for September 2024. “More than one or two jurisdictions have changed their stance towards cryptocurrency in terms of the usage, their acceptance, where do they see the importance of crypto assets. In that stride, we are having a look at the discussion paper once again,” Seth said. The review comes on the heels of President Donald Trump’s executive order , which tasks the Treasury and other federal agencies with reviewing U.S. regulations affecting the digital asset sector. The order stopped short of explicitly mentioning Bitcoin or other specific cryptocurrencies, saying only that the working group “shall evaluate the potential creation and maintenance of a national digital asset stockpile.” You might also like: Indian scammers use Tether’s USDT to launder funds outside the country India’s stringent crypto stance remains Despite India’s strict regulatory environment, which includes a 30% capital gains tax and 1% TDS on transactions, cryptocurrency investment has grown substantially among Indian investors. The country maintains tight oversight, with the Financial Intelligence Unit taking action against non-compliant exchanges. In December 2023, the FIU issued notices to nine offshore cryptocurrency platforms, while Binance paid a $2.25 million fine in June 2024 to resume Indian operations. The Reserve Bank of India has consistently expressed concerns about private digital currencies, reiterating its cautious stance in its December 2024 Financial Stability Report. However, India’s market regulator has suggested a multi-regulator approach to cryptocurrency oversight. This shows a potential openness to private virtual assets among some authorities. The current tax structure remains a barrier for crypto traders. There are currently no provisions for offsetting losses and mandatory deductions on transactions exceeding ₹50,000 per financial year. The regulatory framework involves multiple bodies, including the Reserve Bank of India (RBI), Ministry of Finance, and SEBI. While India continues to prohibit cryptocurrencies as legal tender, the ongoing policy review suggests possible adjustments to the regulatory framework. India’s complicated history with crypto From 2013 to 2017, the RBI issued warnings about the risks of cryptocurrencies, but there were no formal regulations in place. By 2017, as the digital asset class gained popularity, the RBI’s concerns about money laundering and investor protection led to greater scrutiny. The following year, the RBI imposed a banking ban on crypto exchanges, cutting off access to the banking system for the sector. This severely impacted India’s crypto market, until the Supreme Court’s landmark ruling in 2020, which declared the RBI’s ban unconstitutional. This breathed new life into the industry. However, the Indian government has since maintained a cautious stance. While it continues to explore blockchain technology and the introduction of a central bank digital currency (CBDC), the fate of private cryptocurrencies remains uncertain. As discussions around regulation intensify, Indian crypto businesses face challenges in banking access, legal clarity, and investor protection. Despite these obstacles, India remains one of the largest crypto markets in the world. With its tech-savvy population and growing interest in decentralized finance (DeFi), the outcome of India’s crypto journey will likely shape the global regulatory approach in the years to come. Read more: India’s Birla Group-backed business school launches in-house crypto, BIMCOIN
