Crypto Advocates in India Push for Policy Change

India’s cryptocurrency sector is intensifying its call for tax reform, urging the government to revisit what many in the industry view as punitive fiscal policies.

Despite growing international momentum—fuelled in part by former US President Donald Trump’s renewed pro-crypto stance—India’s regulatory environment remains a major hurdle.

Since 2022, a 30% capital gains tax and a 1% tax deducted at source (TDS) on all digital asset transactions have discouraged domestic trading activity.

According to a report by the think tank Esya Centre, nearly 90% of Indian crypto trading volume has migrated to offshore platforms in response to these regulations.

Industry leaders argue the current tax regime stifles innovation, encourages use of unregulated platforms, and marginalises India from the global digital asset economy.

Ashish Singhal, co-founder of leading Indian exchange CoinSwitch, called the current system “very harsh,” proposing instead a 0.1% transaction tax—just one-tenth of the existing rate—as a more balanced approach that could still ensure regulatory oversight without discouraging legitimate activity.

Adding to the industry’s burden, new compliance requirements mandate that designated individuals report digital asset transactions to the Financial Intelligence Unit (FIU-IND), further tightening scrutiny without offering any tax relief.

As India’s crypto ecosystem faces mounting pressure, stakeholders are calling for a more supportive framework that aligns with the country’s ambitions for digital innovation.

Government-Crypto Talks Grow as India Eyes Industry Reform

India’s stance on digital assets appears to be evolving, with industry executives noting a marked increase in engagement between crypto firms and policymakers.

According to Singhal, what was once a biannual conversation with regulators has now become “monthly, if not weekly.”

This growing dialogue coincides with a global shift in sentiment—most notably in the US, where President Trump has publicly embraced digital currencies.

Indian crypto leaders believe this international momentum is beginning to influence domestic policy discussions.

In the weeks following Trump’s return to office in January, reports surfaced that Economic Affairs Secretary Ajay Seth was considering a revision of a key discussion paper that could lay the groundwork for India’s future crypto regulations.

While Seth has not commented publicly, the move suggests Indian regulators may be rethinking their approach.

The industry has long operated under a cloud of regulatory uncertainty.

In 2018, the Reserve Bank of India (RBI) issued a blanket ban preventing banks from servicing crypto firms—a move later overturned by the Supreme Court in 2020.

Since then, the RBI’s tone has softened. Although concerns about financial stability persist, current Finance Secretary Sanjay Malhotra has avoided the strong language used by his predecessors.

Singhal describes the relationship between the crypto industry and the RBI as having shifted from “negative to neutral,” signalling the possibility of more constructive collaboration ahead.

India Reinstates Access for Global Crypto Giants

Global crypto heavyweights are making a return to India as the regulatory environment shows signs of becoming more supportive.

Coinbase, the largest US-based exchange, has officially registered with India’s FIU-IND, paving the way for a re-entry into a market it exited in 2022 due to regulatory ambiguity and payment processing challenges.

Binance, the world’s largest crypto exchange, has followed suit, also registering with the FIU-IND in a move that signals a broader regulatory shift.

Rather than pursuing outright bans, Indian authorities are now focusing on compliance and transparency—an approach seen as a welcome pivot by the global crypto community.

Tom Duff Gordon, Coinbase’s head of international policy, pointed out that the Indian government has realised that banning crypto is no longer an option.

He noted that renewed political momentum in the US, particularly with Trump’s return to office and pro-crypto stance, is bolstering global industry confidence.

India’s evolving regulatory posture could have long-term implications for the sector.

A recent report from Grant Thornton projects that the country’s crypto market will grow sixfold, from $2.5 billion in 2024 to more than $15 billion by 2035.

Kush Wadhwa, partner at Grant Thornton’s Indian arm, said:

“Competition has definitely started heating up. India doesn’t have any option but to adopt it, but the problem for them is money laundering and tax evasion — they’re not saying ‘don’t do it’, but they want a control on it.”