India is reassessing its cryptocurrency stance in response to evolving global perspectives on digital assets. Economic Affairs Secretary Ajay Seth confirmed the ongoing review, citing changes in multiple jurisdictions’ approaches to cryptocurrency adoption and regulation.
The reassessment has delayed the release of a discussion paper initially scheduled for September 2024. Speaking to Reuters, Seth emphasized that shifting international policies have influenced India’s review process.
“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.
Influence of U.S. Policy Changes
India’s review follows recent developments in the United States, where President Donald Trump issued an executive order directing federal agencies to evaluate digital asset regulations. The order stopped short of naming specific cryptocurrencies but mandated an exploration of a potential national digital asset stockpile.
Seth highlighted the cross-border nature of digital assets, noting that India cannot formulate its stance in isolation. While he did not explicitly mention the U.S., Trump’s pro-crypto policy direction appears to be a factor in India’s reconsideration.
India’s Current Crypto Framework
Despite its strict regulatory landscape, India has seen a surge in cryptocurrency investments. The country enforces a 30% capital gains tax on crypto earnings and a 1% tax deducted at source (TDS) on transactions exceeding ₹50,000 per financial year. These measures have led to concerns among traders, as there are no provisions for offsetting losses.
Regulatory oversight remains stringent. In December 2023, the Financial Intelligence Unit (FIU) issued notices to nine offshore cryptocurrency exchanges for non-compliance with local regulations. Binance, the world’s largest crypto exchange, paid a $2.25 million fine in June 2024 to resume operations in India.
The Reserve Bank of India (RBI) has repeatedly voiced concerns about private cryptocurrencies, warning of potential macroeconomic risks. However, India’s securities regulator has proposed a multi-agency approach to crypto regulation, indicating that some authorities see potential in private digital assets.
India’s Crypto Policy Evolution
India’s regulatory journey has been complex. From 2013 to 2017, the RBI issued warnings about crypto risks without imposing direct restrictions. In 2018, it implemented a banking ban on crypto exchanges, which was overturned by the Supreme Court in 2020. This ruling revived India’s crypto sector, but the government has since maintained a cautious approach.
While India continues to prohibit cryptocurrencies as legal tender, it has actively explored blockchain technology and the potential introduction of a central bank digital currency (CBDC). The current review suggests that policymakers are considering adjustments to the regulatory framework, which could shape the country’s stance in the coming years.
The Road Ahead
India remains one of the world’s largest crypto markets, driven by a tech-savvy population and growing interest in decentralized finance (DeFi). However, regulatory uncertainty poses challenges for businesses and investors. The outcome of India’s policy review will be crucial in determining whether the country moves toward greater acceptance of digital assets or continues its restrictive stance.
As global crypto regulations evolve, India’s position could have significant implications for the future of digital asset adoption and oversight worldwide.
