India Reconsiders Its Cryptocurrency Policy Amid Global Shifts

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India is undergoing a significant shift in its approach to cryptocurrency regulation, as global developments prompt a reevaluation of its domestic stance. The Indian government has delayed the release of a long-anticipated discussion paper on digital assets—originally slated for September 2024—due to evolving international attitudes toward crypto adoption and regulation.

Ajay Seth, Secretary of Economic Affairs in India’s Ministry of Finance, confirmed in a recent Reuters interview that the changing landscape across multiple countries has led authorities to reassess their position.

“Not just one country has changed its stance on the use, acceptance, and significance of cryptocurrencies. In this context, we are revisiting the discussion paper,” Seth stated.

While he did not name specific nations, his comments come amid growing momentum in global crypto policy reform—particularly in the United States, where former President Donald Trump recently directed the creation of a dedicated cryptocurrency task force. This group is expected to draft new digital asset regulations and explore the feasibility of a national cryptocurrency reserve, aligning with broader efforts to modernize America’s financial infrastructure.

Why India Can’t Go It Alone on Crypto Regulation

One of the core challenges facing India’s regulatory framework is the inherently borderless nature of digital assets. As Seth emphasized, India cannot afford to adopt a unilateral stance when crypto markets operate globally.

Cryptocurrencies transcend geographical boundaries, making isolated policies ineffective without coordination with international standards. With major economies like the U.S., UAE, Japan, and Singapore advancing clear regulatory frameworks and even exploring central bank digital currencies (CBDCs), India faces increasing pressure to align or risk falling behind in innovation and investor confidence.

👉 Discover how global policy shifts are reshaping the future of digital finance.

Stricter Rules, But Strong Local Demand

Despite maintaining one of the world’s most stringent regulatory environments for crypto trading, India continues to see robust domestic participation in digital asset markets.

Currently, Indian investors face a 30% tax on crypto gains and a 1% tax deducted at source (TDS) on all transactions—a policy introduced in 2022 aimed at curbing speculative trading. Yet, these high barriers have not dampened enthusiasm. According to industry estimates, over 15 million Indians now hold some form of cryptocurrency, with trading volumes consistently ranking among the top globally.

This paradox—tight regulation paired with strong retail demand—highlights the need for a more balanced and forward-looking policy framework.

Cracking Down on Foreign Exchanges

India has taken firm action against overseas crypto platforms operating without compliance. In December 2023, the Financial Intelligence Unit (FIU) issued show-cause notices to nine foreign exchanges for failing to register under India’s anti-money laundering (AML) framework.

Among them, Binance—the world’s largest crypto exchange by volume—was fined ₹188 crore (approximately $2.25 million) in June 2024 for non-compliance. The penalty was lifted only after Binance formally registered with the FIU, signaling a new era of accountability for international players seeking access to India’s vast user base.

This enforcement underscores the government’s intent: it’s not banning crypto outright but demanding adherence to local laws, especially around KYC (Know Your Customer), transaction reporting, and tax transparency.

👉 See how compliant platforms are shaping the next phase of crypto growth.

Diverging Views Within Indian Regulators

There is no unified voice within India’s regulatory ecosystem when it comes to virtual assets.

On one hand, the Securities and Exchange Board of India (SEBI) has reportedly recommended a multi-regulator model for overseeing crypto trading—suggesting support for a regulated market that could include private digital assets. Such a proposal marks a notable softening compared to past skepticism.

On the other hand, the Reserve Bank of India (RBI) remains cautious. It has long argued that private cryptocurrencies pose systemic risks to monetary stability, financial integrity, and consumer protection. The RBI advocates for tight restrictions or even a complete ban on decentralized digital currencies, favoring instead the development of a sovereign-backed digital rupee (e₹).

This internal divide reflects a broader tension between innovation and control—a challenge many emerging economies face as they navigate Web3 transformation.

What’s Next for Crypto in India?

As geopolitical dynamics evolve and technological adoption accelerates, India stands at a crossroads.

Will it choose to open its doors to a regulated crypto economy, leveraging blockchain for financial inclusion and tech leadership? Or will it double down on restrictions, prioritizing caution over competitiveness?

Several factors will influence this decision:

👉 Explore what India’s policy evolution means for global crypto investors.

Frequently Asked Questions (FAQ)

Q: Is cryptocurrency legal in India?
A: Yes, cryptocurrency is not banned in India. While there is no comprehensive legal framework yet, trading is permitted under existing tax and anti-money laundering regulations.

Q: Does India have its own cryptocurrency?
A: No, India does not issue private cryptocurrencies. However, the Reserve Bank of India is piloting the digital rupee (e₹), a central bank digital currency (CBDC), which is legally recognized as tender.

Q: Are crypto exchanges allowed to operate in India?
A: Yes, both domestic and international exchanges can operate if they comply with KYC, AML, and FIU registration requirements. Non-compliant platforms face penalties or restrictions.

Q: How much tax do Indians pay on crypto gains?
A: Indian residents are subject to a 30% tax on profits from cryptocurrency transactions, plus a 1% TDS on every trade—regardless of profit or loss.

Q: Will India regulate crypto in 2025?
A: While no final timeline has been confirmed, officials have indicated that a revised discussion paper may be released soon, paving the way for formal legislation in the coming years.

Q: Can I invest in crypto safely in India?
A: Yes, provided you use compliant exchanges that follow Indian regulations and implement strong security measures. Always conduct due diligence before investing.

Core Keywords:

India’s journey toward a mature digital asset ecosystem is unfolding cautiously but inevitably. As global norms shift and domestic pressures grow, 2025 could mark the year when India transitions from hesitation to structured innovation in the crypto space.