India Reevaluating its Crypto Stance Amid Global Adoption and Policy Changes

India is reviewing its crypto regulations following global policy changes and shifting attitudes towards digital assets. The country is reassessing its approach as various governments, including the United States, introduce new policies on cryptocurrency. The ongoing review could lead to updates in India crypto regulations, affecting investors and exchanges.

India Revisiting Crypto Regulations Amid Global Policy Shifts

India is reviewing its cryptocurrency regulations as many other countries change their positions on digital assets. The Indian Economic Affairs Secretary, Ajay Seth, stated that the government is currently considering revisiting rules on the discussion paper about India’s crypto regulations in a bid to adapt to global trends.

“More than one or two jurisdictions have changed their stance towards cryptocurrency in terms of usage and acceptance. In that stride, we are having a look at the discussion paper once again,” Seth told Reuters.

The review followed recent actions in the United States, in which President Donald Trump has demanded the establishment of a cryptocurrency working group. India recognizes that digital assets operate internationally, which puts pressure on India’s crypto regulation in compliance with the global trends.

India’s Current Crypto Regulations and Enforcement Actions

India is one of the strict countries that have implemented high taxes and severe constraints in the use of cryptocurrencies. In December 2023, the Financial Intelligence Unit (FIU) served notices to nine offshore cryptocurrency trading platforms for not abiding by India crypto regulations.

In June 2024, Binance was penalized to the tune of 188.2 million rupees ($2.25 million) following its registration with the FIU. However, the enforcement actions have not affected the adoption of cryptocurrencies in the country and thus the authorities are over again reflecting on their stand.

In 2023, India’s market regulator suggested a multi-agency approach to the regulation of cryptocurrencies, implying a shift in its current policies. Nonetheless, the Reserve Bank of India has maintained its apprehensions about the concerns related to private digital currencies. The upcoming policy review will decide whether India will follow a more systematic approach to crypto regulation.

New Tax Policies on Undisclosed Crypto Gains

India has also begun implementing new tax measures for cryptocurrency traders. With the changes in the Income Tax Act, the gains from one’s cryptocurrency investment will be taxed under Section 158B which ordinarily deals with money, jewelry and bullion.

In a statement, the government said that to write in conformity with section 285BAA of the Act, a reporting entity would need to report information relating to crypto assets. These rollouts will be implemented from February 1, 2025, as the Indian government works towards legislating the decentralized market.

One of the penalties those using cryptocurrencies to trade without declaring their gains are liable to face is a penalty of up to 70%. The penalty is relevant to undisclosed gains up to the four years of the tax assessment year. This was as a result of probes showing that many cryptocurrency exchanges had not remitted goods and services taxes (GST) amounting to 824 crore rupees ($97 million).

Global Cryptocurrency Tax Regulations and Compliance Efforts

India’s approach to cryptocurrency taxation aligns with global efforts to regulate digital assets. 

Concurrently, in June 2024, the U.S. Internal Revenue Service (IRS) introduced new regulations requiring centralized exchanges to report digital asset transactions.

The Blockchain Association filed a lawsuit against the IRS in December 2024, arguing that these regulations extend data collection requirements to decentralized exchanges. Similar concerns have been raised in India, where regulatory uncertainty has prompted exchanges like Bybit to suspend services.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

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