India’s crypto industry has called for measures around regulatory framework and simplified tax structures in the upcoming budget to be presented by Finance Minister Nirmala Sitharaman on February 1. This assumes significance as India leads the global adoption of cryptocurrencies even as investors brave the country’s stringent regulations and steep taxes.
Vishal Sacheendran, Head of Markets at largest crypto exchange Binance called “progressive measures” to positively impact the industry. “We strongly believe that a balanced regulatory framework is key to unlocking the full potential of the VDA (virtual digital assets) space in India. Such a framework should encourage innovation, promote transparency, and ensure robust investor protection,” said Sacheendran.
Additionally, with India having the opportunity to establish itself as a global hub for Web3 and blockchain adoption, Sacheendran called for an ecosystem that supports blockchain-based technologies in order to attract global talent and investment, while also creating local job opportunities in emerging sectors.
Experts also suggested for alignment of India’s crypto policies with the global regulatory framework to fully harness the industry’s potential.
Raj Karkara, COO at crypto exchange ZebPay said the budget should look at revisiting the 30 per cent tax on crypto income and 1 per cent TDS mechanism.
“Simplified tax structures can encourage wider participation while boosting liquidity and trading volumes. Recognition of crypto as a formal asset class, with regulatory guidelines, will not only safeguard investors but also provide a stable foundation for the industry’s growth,” said Karkara.
Importantly, VDA service providers were brought into the ambit of the anti-money laundering/counter financing of terrorism (AML-CFT) framework by the government under the provisions of the Prevention of Money Laundering Act (PML) Act, 2002 in March 2023.
As part of compliance action against the offshore entities, Financial Intelligence Unit India had issued show cause notices to nine offshore VDA service providers under Section 13 of the Prevention of Money Laundering Act, 2002 (PMLA) for non-compliance with local rules.
Meanwhile, Karkara also requested for policies that incentivise innovation, such as subsidies or tax breaks for blockchain and Web3 startups.
“Such measures will position India as a global hub for decentralised finance, digital identity solutions, and asset tokenisation.”
Shivam Thakral, CEO of India’s second-longest-running crypto exchange BuyUcoin also called for policies that not only get people to invest but also bring talent back to India, helping Web3 startups thrive.
“The government can make the most of blockchain technology and decentralized finance by setting clear guidelines and changing tax rules. We believe that if the upcoming budget includes helpful measures, India can become a world leader in Web3. This is an opportunity for the government to solidify its commitment to building a strong digital economy that benefits all stakeholders involved,” said Thakral.
