India's Cryptocurrency Policy Remains in Flux

India's approach to cryptocurrencies is a mixed bag, with taxation and anti-money-laundering rules in place, but no comprehensive regulatory framework. Virtual digital assets are subject to a separate tax regime, with gains taxed at 30%, and transfers falling within a tax-deduction framework. However, this does not mean that the government recognizes cryptocurrencies as conventional financial assets.

Crypto service providers operating in or serving India are subject to anti-money-laundering requirements, including registration as reporting entities, customer verification, record keeping, and suspicious-transaction reporting. Authorities have continued enforcement against platforms that fail to meet these requirements.

Stablecoins, which are linked to foreign currencies, particularly the US dollar, raise concerns about monetary sovereignty and reduced reliance on the rupee. Policymakers worry about the possibility of dollarization, which could lead to a loss of control over financial conditions.

The current system relies on taxation, anti-money-laundering supervision, and enforcement against non-compliant service providers. Global rules on digital assets are still uneven, with some jurisdictions introducing regulated exchange-traded products and others focusing on restrictions and licensing.