Indian Web3 Firms Introduce COINS Act for Crypto Regulation

Indian Web3 firms Hashed Emergent and Black Dot have introduced the COINS Act, a comprehensive regulatory blueprint for cryptocurrencies, to India's parliament. The Crypto-systems Oversight, Innovation and Strategy Act aims to provide clear legislative guidance for crypto rights and oversight structures, addressing key areas that affect Indian crypto users.

The framework focuses on three core areas: unclear Anti-Money Laundering mandates, lack of express rights to self-custody, and privacy concerns for builders. To tackle these issues, the COINS Act proposes the creation of the Crypto Assets Regulatory Authority to oversee crypto activities. The model law incorporates global standards from the EU's MiCA regulation and Singapore's regulatory sandbox, adapting them to India's constitutional context.

The proposed legislation includes specific provisions for different types of crypto businesses. Centralized exchanges would face full licensing requirements, while non-custodial protocols would operate under simple disclosure rules. Permissionless protocols would receive complete compliance exemption under the proposed framework.

The COINS Act is designed to address India's restrictive crypto environment, which has driven many companies offshore due to punitive taxation and regulatory uncertainty. The model law aims to reverse this trend by providing rights-first certainty and innovation safe harbors, encouraging DeFi protocols, gaming studios, and infrastructure projects to return to India.

Current tax policies in India create substantial barriers for crypto users. The Income Tax Act imposes a 30% flat rate on virtual digital asset profits, and a 1% tax is deducted at source on transactions exceeding a certain threshold. These policies contrast sharply with the COINS Act's approach, which focuses on protecting fundamental crypto rights as constitutional extensions.

The proposed legislation also includes a strategic recommendation for India to create a Bitcoin reserve. This reserve would be funded using legally seized crypto assets overseen by parliament, with additional funding through modest market purchases. This approach aligns with global trends, as several US states are advancing similar Bitcoin reserve legislation.

The COINS Act aligns with worldwide regulatory developments moving toward comprehensive crypto frameworks. Recent analysis shows that a significant number of Financial Stability Board members plan to introduce new crypto frameworks, with many developing stablecoin regulations. The EU's MiCA regulation and improved licensing regimes in Asian financial centers like Singapore support the approach taken by the COINS Act.

India's crypto landscape shows significant potential despite regulatory challenges. The model law creators plan to engage with key regulatory bodies, including the Ministry of Finance and the Reserve Bank of India, through workshops. This collaborative approach reflects growing confidence that user pressure will eventually lead to favorable policy adoption.

International precedent supports the COINS Act's strategy of establishing clear rights before implementing oversight. Countries with proactive crypto frameworks have successfully attracted innovation while maintaining financial stability. The proposal offers India an opportunity to position itself as a digital asset destination, rather than continuing policies that drive talent and investment abroad.