India Reviews Crypto Regulations Amid Global Policy Shifts and New Tax Rules

India is reviewing its cryptocurrency regulations in response to evolving global policies and changing attitudes toward digital assets. The reassessment comes as major economies, including the United States, introduce new frameworks to regulate the crypto sector.

Ajay Seth, India’s Economic Affairs Secretary, confirmed that the government is revisiting its discussion paper on crypto regulations.

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

India’s current regulatory framework imposes strict measures, including high taxation and compliance requirements for crypto exchanges. In December 2023, the Financial Intelligence Unit (FIU) issued notices to nine offshore crypto platforms for non-compliance. Binance, one of the affected exchanges, faced a penalty of 188.2 million rupees ($2.25 million) after its registration with the FIU.

Despite stringent regulations, crypto adoption in India remains robust, prompting authorities to reconsider their approach. In 2023, India’s market regulator proposed a multi-agency framework for overseeing digital assets, suggesting a potential shift towards more comprehensive policies. However, the Reserve Bank of India (RBI) continues to express concerns over the risks posed by private cryptocurrencies.

The review also coincides with the introduction of new tax policies targeting undisclosed crypto gains. Starting February 1, 2025, Section 158B of the Income Tax Act will tax crypto profits, a section usually reserved for money, jewelry, and bullion. Reporting entities will be required to disclose information related to crypto transactions, and failure to report gains could result in penalties of up to 70% for undisclosed earnings within a four-year assessment period.

Globally, India’s regulatory efforts mirror broader trends. In June 2024, the U.S. Internal Revenue Service (IRS) mandated centralized exchanges to report digital asset transactions. And this triggered legal challenges from industry groups like the Blockchain Association. Similar compliance concerns have emerged in India, leading exchanges such as Bybit to suspend services.

Editorial Note: This news article has been written with assistance from AI. Edited & fact-checked by Harshajit Sarmah.