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Policy changes in the United States over the past year have significantly influenced the global cryptocurrency narrative. India, previously known for its cautious approach, is now reconsidering its stance. Economic Affairs Secretary Ajay Seth emphasized the need for a unified global strategy, noting that digital assets transcend national borders and unilateral regulations would be ineffective.
India Pursues a Regulatory Review Influenced by U.S. Policy
India’s reassessment aligns with shifts in U.S. policy, particularly the executive order issued by President Donald Trump. The order establishes a working group tasked with formulating a federal regulatory framework for cryptocurrencies. Additionally, it explores the feasibility of a national digital asset stockpile, signaling a strategic pivot toward embracing digital assets. These developments have prompted India to reconsider its own approach, ensuring it remains competitive and aligned with global financial trends.
Late Discussion Paper Reflects Changing Views Around the World
Initially, India had planned to release a discussion paper on cryptocurrencies in September 2024. However, given the evolving international landscape—particularly the U.S. move toward a more favorable regulatory stance—the publication was delayed. Ajay Seth highlighted that as global perspectives on cryptocurrency continue to shift, India must adapt its regulatory outlook accordingly. The delay reflects India’s effort to incorporate international best practices into its policy framework.
Dropped Hints for Cryptocurrency Compliance
During India’s Union Budget 2025 presentation, Finance Minister Nirmala Sitharaman did not explicitly mention cryptocurrency regulations. However, the budget introduced stricter compliance measures for taxpayers engaging in crypto transactions. The proposed amendments in tax regulations underscore the government’s intent to enhance oversight of digital asset transactions. Strengthened compliance norms suggest that while India is becoming more open to crypto adoption, it aims to do so within a well-defined regulatory framework.
India is Fast Leading the Way for Global Crypto Adoption
Despite regulatory challenges, including a 30% capital gains tax and a 1% tax deducted at source (TDS) on transactions, India has emerged as a leader in crypto adoption. A 2024 report ranked India as the number one country in global crypto adoption for the second consecutive year. This resilience underscores the strong interest of Indian investors in digital assets, even in the face of strict taxation policies. The robust adoption rate reflects both public enthusiasm and the potential for a thriving digital economy in India.
Striking the Right Regulatory Balance
India is preparing to release a crypto consultation paper in March 2025. Chaired by the Secretary of the Department of Economic Affairs, the consultation aims to solicit feedback from stakeholders to develop a comprehensive regulatory framework for virtual digital assets (VDAs). By engaging with domestic and international stakeholders, India seeks to create regulations that promote innovation while ensuring economic integrity. This initiative highlights India’s commitment to fostering a balanced approach that encourages responsible crypto adoption and minimizes associated risks.
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FAQs
Why is India re-examining its crypto policy?
India’s crypto regulations are due to the turmoil in international policy, particularly in relation to the stance of the largest economy in the world, the U.S., and wants to align with international standards in all scenarios while at the same time resolving local tax and compliance issues.
Will it reduce crypto taxes in 2025?
Though nothing is confirmed, there is some talk of tax changes. Tax Optimism in India: Lower Capital Gains Tax and TDS Relaxation Expected to Empower Crypto Investors
How does U.S. crypto policy affect India?
The U.S. executive order endorsing digital assets has set the tone for a rethink in India as it opens up discussions around regulatory clarity and revisions to remain competitive on the global front.
When do the final crypto regulations come out in India?
By March 2025, the government will be releasing a crypto consultation paper that will welcome stakeholders’ feedback before finalizing a crypto framework. Implementation timelines remain uncertain, though, based on government deliberations.
Resources:
Cryptonews.com
