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While the global interest in crypto assets continues to surge, India is adopting a measured and deliberate strategy toward regulation. Rather than hastily enacting legislation, the country is meticulously assessing use cases, adapting to evolving global standards, and responding to shifts in the industry following prominent crypto collapses.
Recent statements indicate that the world’s leader in grassroots crypto adoption may take years to formulate comprehensive regulations.
India’s Leadership in Global Crypto Governance
In 2021, India attracted attention by taking a firm stance against private cryptocurrencies, except for specific exceptions promoting the underlying technology. Simultaneously, the country laid the groundwork for its Central Bank Digital Currency (CBDC).
In 2022, India introduced a 30% tax on crypto profits and a 1% tax deducted at source (TDS) on digital asset transactions, prompting a shift toward decentralized exchanges (DEXs) and offshore trading.
Entering 2023, India assumed a global leadership role during its G20 presidency, where finance ministers agreed on a regulatory roadmap. This roadmap aligns with international standards set by the Financial Action Task Force (FATF), emphasizing consistent global regulation, outreach to non-G20 countries, and the encouragement of data sharing.
A Unified Global Strategy
The outcome of these discussions is a relatively unified strategy for regulating the cryptocurrency industry globally. The approach includes ensuring transparency in crypto transactions by sharing information on fund senders and recipients, scrutinizing virtual asset service providers more closely, and evaluating how countries implement new standards.
Practically, this translates to an increase in anti-money laundering (AML) and Know Your Customer (KYC) procedures.
India also welcomed a paper from the International Monetary Fund (IMF) and Financial Stability Board (FSB) on crypto regulation. Despite following a global direction, India retains flexibility to chart a slightly different course.
A Methodical Approach: Less Crypto, More Web3?
In contrast to the European Union’s swift implementation of its landmark MiCA bill in 2023, India appears poised to spend the next year evaluating approaches before finalizing legislation. The Indian Minister of Finance confirmed the country’s intention to design a bill more suited to an emerging-market economy.
Jayant Sinha, Chair of the Parliamentary Standing Committee on Finance, indicated that India might not see specialized crypto regulatory legislation before mid-2025. He emphasized the ongoing evolution of specific use cases and global regulatory standards. The year 2024, marked by crucial elections, could further shape India’s crypto landscape.
Sinha encouraged the tech community to propose an India-specific white paper or regulatory framework. However, he highlighted the challenges posed by India’s high capital controls limiting rupee trade, stating that enabling crypto assets is currently not feasible.
When India eventually unveils its regulations, they may focus less on cryptocurrencies themselves and more on the broader applications of blockchain technology. According to Sinha, cryptocurrency is just one use case underlying the concept of Web3.
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