New Delhi:
India’s crypto story is no longer about survival. It’s about structure.
Despite a 30 percent tax on profits and 1 percent TDS on every trade, millions of Indians continue to buy, hold and build crypto. Exchanges report steady user interest. Web3 founders keep emerging from Indian cities. Developers are creating global products.
But most of this activity is happening around India, not within it. The reason is clear: regulation is still taking hold.
“The thing that is holding back broader mainstream growth is regulation,” says Ashish Singhal, co-founder of CoinSwitch. “If regulations become more innovation-friendly, India can move from just a talent hub to a full-stack Web3 ecosystem.”
This reflects India’s crypto paradox. The talent is here. Users are here. Capital interest lies here. Not a policy facility.
Taxation: legal, but expensive
India’s tax system did an important job. It accepted crypto as a taxable asset class. This brought validity and traceability.
But it also changed user behavior. The 30 per cent tax and 1 per cent TDS has “impacted liquidity and active trading participation,” says Satvik Vishwanath, co-founder and CEO of Unocoin.
Retail traders were in recession. High-frequency trading declined. Many users shifted to long-term holding instead of active trading. Some serious builders and businessmen moved abroad where the tax treatment is lighter and the rules are clearer.
Nevertheless, adoption did not decline. It matured. Users now view crypto like gold or equities – part of a diversified portfolio, not a get-rich-quick bet.
Regulation: from ambiguity to oversight
India’s stance is evolving. Virtual digital assets are now within the tax and compliance ambit. Reporting norms have become stricter. Exchanges follow strict KYC (Know Your Customer) and audit standards.
But the industry is still waiting for a bigger document – a comprehensive regulatory framework. “Regulation and taxation are not barriers; they are cornerstones,” says Vikas M Sachdeva, CEO of BitDelta India.
“What we now need is clarity and guidance… a streamlined approach to TDS, well-defined tax slabs and clear operational norms.”
This is where the tone of the conversation has changed. The question now is not whether India will regulate crypto. It depends on how thoughtfully it will do it.
India’s stake is higher than most countries
India is not a marginal crypto market. It is the center of global conversation. Over 120 million users. Large-scale cross-border remittances. A deep fintech ecosystem. A young, digital-native population.
“The infrastructure, talent and investor appetite are already here,” says Edul Patel, founder and CEO of Mudrex. “India now needs legal recognition of VDAs as a distinct asset class, proportionate tax structure and a clear licensing regime.”
He says that global regulatory signals are strengthening. Other large economies are moving toward formal structures. There is less and less scope for India to lead rather than follow.
What is the industry asking for?
The question is not of deregulation, it is of predictable regulation. The demands are consistent in all voices:
- Rationalize 1% TDS to improve liquidity
- Apply tax slabs instead of a flat 30% rate
- Define licensing rules for exchanges and VDA players
- Provide legal recognition to crypto as a distinct asset class
- Align India’s approach with global regulatory standards
From Talent Hub to Web3 Powerhouse
Today, Indian developers build global Web3 products from Dubai, Singapore and Europe. Indian founders register companies abroad. Capital flows out before it can spread locally.
As Singhal says, India risks remaining a talent exporter rather than becoming a Web3 product nation. A friendly framework can reverse this. Products can be manufactured, expanded and operated from India for global markets.
India has already taken the first step by bringing crypto under the tax net. The next step is policy maturity.
The industry is not opposing the inspection. It’s asking for structure. Because users are ready. Builders are ready. The capital is ready. Now, the policy must gain momentum.