India's Crypto Stance Shifts as Global Acceptance Grows

India's Stance on Crypto Evolving as Global Sentiment Shifts

India, once known for its anti-crypto approach, is reviewing its stance on cryptocurrencies as global sentiments shift towards digital asset acceptance. Despite high taxes, India leads global crypto adoption, ranking #1 in 2024. The government is considering multiple regulators to oversee cryptocurrency trading.

India's Economic Affairs Secretary, Ajay Seth, confirmed in a recent interview that the country is actively reviewing its approach to crypto assets, noting the shift in attitudes from other jurisdictions regarding the usage and acceptance of digital assets. The move is part of a global shift in which nations ranging from the U.S. to others have eased their approach to regulating digital assets. Seth also pointed out that the change in the international market is also influencing India's stance and noted that the government is considering a new discussion paper in which it will determine its position on digital assets.

India's Current Crypto Tax Structure

Though crypto remains unregulated in India, the government has implemented a tax structure for digital assets. In 2022, India introduced a 1% tax Deduction at Source (TDS) on crypto transactions and imposed a 30% capital gains tax on crypto investments. Despite these high taxes, India has emerged as a global leader in crypto adoption, ranking first in global crypto adoption metrics in 2024, according to analytics firm Chainalysis.

Challenges and Enforcement in the Crypto Sector

India's tough regulatory stance has not hindered cryptocurrency investments but has led to increased scrutiny of exchanges and businesses operating in the sector. In December 2023, the Financial Intelligence Unit (FIU) issued show-cause notices to nine offshore crypto exchanges for failing to comply with local regulations. Later, in June 2024, Binance was fined 188.2 million rupees (around $2.25 million) after allegedly registering with the FIU to operate again in the country.

However, with the global crypto market evolving further, the authorities in India are now listing more regulatory options. In 2023, India's market regulator suggested that multiple regulators could oversee cryptocurrency trading, confirming that some parts of the government are open to allowing private virtual assets as long as they're under a more comprehensive regulatory framework.