India’s stance on cryptocurrency has been one of the most dynamic and debated topics in the global digital asset space. From outright bans to regulatory crackdowns and, more recently, discussions about structured oversight, India’s crypto regulatory journey has been a rollercoaster. However, there are signs that the country is shifting toward a more structured and pragmatic regulatory approach, considering global trends and economic realities. This article explores India’s evolving crypto regulations, key policy changes, and the potential future of digital assets in the country.
Prior Approach
India has maintained a cautious stance toward cryptocurrency, oscillating between restrictive measures and potential regulatory frameworks. However, recent developments suggest that the country may be shifting its approach to digital assets, drawing the attention of global crypto service providers and investors. This article explores India’s historical regulatory stance, its current position, and the potential future of cryptocurrency regulation in the country.
The Historical Regulatory Approach
India’s engagement with cryptocurrency regulation has been a rollercoaster ride. In 2018, the Reserve Bank of India (RBI) imposed a blanket ban on banks facilitating crypto transactions, citing concerns about illicit activities and financial stability. However, in 2020, the Supreme Court of India overturned the ban, providing a temporary respite for the crypto industry. Despite this victory, the lack of a clear regulatory framework has left businesses and investors in a state of uncertainty. 
The Indian government has repeatedly expressed concerns about cryptocurrency being used for money laundering, tax evasion, and terrorist financing. In response, it has considered introducing a regulatory bill that could either strictly control or outright ban private cryptocurrencies while promoting the development of a Central Bank Digital Currency (CBDC). This bill, however, has faced delays, leaving the market in a state of limbo.
Recent Developments: A Shift in Stance?
Recent reports indicate that India may be softening its approach to cryptocurrency regulation. The shift can be attributed to several factors:
- Global Influence: India is a key participant in international discussions on digital assets. The country’s presidency of the G20 saw discussions on implementing a global framework for crypto regulation, aligning with recommendations from the Financial Stability Board (FSB) and the International Monetary Fund (IMF).
- Taxation Measures: The introduction of a 30% tax on crypto gains and a 1% TDS (tax deducted at source) on transactions was initially seen as a deterrent. However, the government’s decision to tax digital assets rather than ban them outright signals a possible intent to regulate rather than prohibit.
- Market Growth and Adoption: Despite regulatory uncertainty, India remains one of the largest crypto markets in the world. Blockchain and crypto startups continue to attract funding, and many businesses are integrating blockchain solutions to enhance efficiency.
- CBDC Implementation: The launch of India’s digital rupee (CBDC) represents a major step in digital finance. While some see this as a competitor to private cryptocurrencies, it also indicates the government’s willingness to embrace blockchain technology in a regulated manner.
Compliance and Challenges for Businesses
With the evolving regulatory landscape, crypto businesses in India must navigate compliance challenges. Key regulatory aspects include:
- AML and KYC Regulations: Businesses dealing in crypto assets must adhere to Anti-Money Laundering (AML) and Know Your Customer (KYC) guidelines under the Prevention of Money Laundering Act (PMLA).
- Taxation Framework: The current tax regime imposes significant compliance costs on crypto transactions, affecting trading volumes on Indian exchanges.
- Potential Licensing Requirements: As regulation matures, businesses may be required to obtain licenses similar to those in traditional financial services.
India is signaling a shift in its crypto regulations, attracting global crypto service providers eager to enter the market. Recent developments suggest a move toward structured oversight rather than outright bans, influenced by international discussions and taxation policies. The potential for regulatory clarity has renewed interest from exchanges and blockchain firms. However, compliance with India’s stringent tax and AML regulations remains a challenge. The evolving landscape could position India as a major crypto hub. On March 11, 2025 Coinbase registered with India’s Financial Intelligence Unit to launch its its retail trading platform. This follows registrations by competitors such as Binance, Bybit, and KuCoin.
