India Revisits Crypto Stance Amid Global Shift

India has initiated a review of its cryptocurrency policies, signaling a potential shift in its stance towards digital assets. Economic Affairs Secretary Ajay Seth revealed in an interview that the government is revisiting a discussion paper on cryptocurrency regulation that was previously shelved in 2024.

The current regulatory framework in India imposes strict oversight on cryptocurrency activities, with traders and investors subject to substantial taxation. Since 2022, the country has implemented a 30% capital gains tax on crypto profits and a 1% tax-deducted-at-source (TDS) on all cryptocurrency transactions. Despite appeals from the cryptocurrency sector for more favorable policies, these tax measures have remained unchanged.

The decision to review India's cryptocurrency stance comes amidst a global shift in attitudes towards digital assets. Several countries are adopting more accommodating positions, particularly influenced by developments in the United States under the Trump administration. Economic Affairs Secretary Seth emphasized that multiple jurisdictions have modified their positions regarding cryptocurrency usage and acceptance, prompting India to reconsider its approach.

The original discussion paper, which aimed to outline India's comprehensive approach to cryptocurrency regulation, was delayed in 2024 as government officials prioritized other matters. This postponement left many questions unanswered about the future of digital assets in one of the world's largest economies. Despite the current unregulated status of cryptocurrencies in India, the government has maintained strict oversight through its tax policies, effectively acknowledging the existence of crypto trading while ensuring state revenue from such activities.

The cryptocurrency industry in India has faced challenges under the existing tax regime, with many businesses and traders arguing that the high rates have hindered market growth and innovation. The 1% TDS requirement, in particular, has been cited as a barrier to frequent trading and market liquidity. The timing of India's policy review coincides with broader international developments in cryptocurrency regulation, as various countries establish more defined regulatory frameworks for digital assets.

The influence of U.S. policy changes under the Trump administration has been notable in shaping global attitudes towards cryptocurrency. The approval of various crypto-linked financial products in the U.S. has created precedents that other nations are considering in their own regulatory approaches. India's large technology-savvy population and growing digital economy make it a potentially important market for cryptocurrency adoption. The government's willingness to revisit its stance suggests an acknowledgment of the evolving