The Indian government has confirmed it will not draft a standalone law to regulate cryptocurrency, opting instead to apply existing statutes on taxation, anti-money laundering, and financial stability. Officials worry that a dedicated crypto law could misleadingly imply government endorsement or safety, especially for novice investors.
The Finance Ministry shared this position with the Standing Committee on Finance, emphasizing a strategy to promote the Reserve Bank of India’s digital currency, the e-Rupee, as a safer alternative. The government is also exploring the use of e-Rupee for direct benefit transfers to citizens.
Why Is the Government Holding Back?
The ministry’s Economic Affairs Division noted that cryptocurrency’s decentralized nature makes it difficult to regulate. Transactions often occur on platforms without intermediaries, and stricter rules on regulated exchanges could push activity to unregulated systems that are even harder to monitor.
Officials also cautioned that formal regulations might give first-time investors a false sense of security, equating “regulated” with “safe,” despite the high volatility of crypto markets. They pointed out that global crypto regulations remain fragmented and incomplete.
Instead of creating new legislation, India will leverage existing laws covering money laundering, taxation, consumer rights, and financial stability to monitor the sector. The government also plans to track international developments in crypto regulation.
Tax Rules Stay Same
Crypto remains illegal tender in India. Profits from digital asset transactions are subject to a 30% tax plus a 4% cess, and losses from one crypto trade cannot offset gains from another.
The Financial Intelligence Unit already oversees crypto firms operating in India. More than 50 platforms, including CoinDCX and Binance, are registered with authorities.
For now, the government’s approach is one of caution: manage crypto risks through existing laws while quietly building the e-Rupee as a trusted digital alternative.