India’s cryptocurrency landscape is undergoing significant changes as the government reconsiders its regulatory approach. The shift comes as global powers, particularly the United States, adopt more crypto-friendly stances. Let me break down the key developments and what they mean for India’s digital asset future.
Why India is Changing its Crypto Stance
The Department of Economic Affairs has confirmed a fresh review of India’s cryptocurrency framework. This move reflects a growing recognition of digital assets’ role in global finance. The government aims to align its policies with international trends while maintaining strict oversight.
The reassessment focuses heavily on cross-border implications. We’re seeing increased attention to how other nations use cryptocurrencies for international payments. This matters because India wants to avoid isolation from global financial innovations.
New Tax Rules Shape Digital Asset Landscape
The government maintains strict control through robust taxation. A 30% capital gains tax and 1% transaction levy continue to apply to all crypto income. Additionally, Budget 2025 has introduced expanded reporting requirements for both exchanges and banks.
A significant development is the new 70% penalty on undeclared crypto gains. This retroactive measure covers the past four years, bringing digital assets in line with traditional financial instruments under Section 158B of the Income Tax Act.
Central Bank Takes Different Path
While the government reviews regulations, the Reserve Bank of India maintains its cautious stance. The RBI’s leadership has expressed strong concerns about cryptocurrency risks. Instead, they’re pushing forward with their own digital currency initiative.
The central bank’s pilot program for wholesale digital currency demonstrates their preferred approach. This project focuses on controlled, state-backed digital assets rather than private cryptocurrencies.
Market Growth Despite Restrictions
India’s crypto market shows remarkable resilience. Despite tough regulations, the country led global adoption rates throughout 2023 and 2024. However, strict enforcement has impacted the market structure, with several exchanges choosing to exit.
The Financial Intelligence Unit’s recent actions against major platforms like Binance highlight the government’s commitment to enforcement. Yet the market continues to adapt and evolve under these constraints.
What This Means for India’s Digital Future
The ongoing policy revision represents a delicate balance. While India acknowledges global trends toward crypto acceptance, it maintains strict oversight through taxation and enforcement. This approach aims to leverage blockchain innovation while protecting financial stability.
The development of the central bank digital currency alongside crypto regulation reviews suggests a dual-track approach. India seems determined to participate in the digital asset revolution while maintaining significant state control over the process.