India Stalls Full Crypto Framework, Citing Systemic Risk Fears: Report

India is leaning against introducing a comprehensive crypto law and will instead maintain partial oversight of the sector, a government document ￰3￱ fear that integrating digital assets into the country’s mainstream financial system could heighten systemic ￰4￱ document, prepared this month and reported by Reuters, shows the Reserve Bank of India’s (RBI) longstanding ￰5￱ central bank argued that effective regulation would be difficult in practice and that granting cryptocurrencies legitimacy could fuel wider adoption, making the sector ￰6￱ an outright ban could curb the “alarming” risks from speculative assets, the government acknowledged it would not prevent peer-to-peer transfers or activity on decentralized ￰7￱ has relied on heavy taxation and compliance requirements to contain crypto activity.

A 30% tax on profits and a 1% tax deducted at source on transactions have sharply reduced domestic trading volumes. However, global exchanges are permitted to operate if registered with the Financial Intelligence Unit, as seen when Bybit resumed services after paying a 9.27 crore rupee ($1.06 million) penalty for earlier ￰8￱ these restrictions, crypto adoption remains ￰9￱ government estimated that Indians hold roughly $4.5 billion in digital assets, with limited adoption and strict rules helping to contain risks to the wider financial system. A growing number of young Indians are turning to crypto trading to supplement their incomes amid stagnant job growth and slow wage increases. #India #Crypto ￰0￱ — ￰10￱ (@cryptonews) February 25, 2025 Officials said the current framework discourages speculative trading and penalizes fraud, even as India continues to rank at the top of the global crypto adoption index , ahead of the United ￰11￱ government also raised concerns about the role of stablecoins, noting that while they are designed for price stability, they remain vulnerable to market ￰12￱ widespread use, the document said, could fragment domestic payment systems and undermine India’s widely adopted Unified Payments Interface (UPI).

With most stablecoins pegged to the U. S. dollar, their growth could also pose challenges to global financial ￰13￱ now, India is maintaining its cautious approach: tightening oversight without granting digital assets the legal recognition that could make them ￰14￱ Crossroads: Crypto Industry Pushback Against Central Bank Skepticism While the Reserve Bank of India has maintained deep skepticism toward digital assets, demand has persisted among Indian investors despite some of the world’s toughest tax ￰15￱ arms of government have also pushed for clarity. India’s Supreme Court recently urged the government to establish clear regulations , arguing that the 30% tax on crypto gains and the 1% TDS levy amount to implicit recognition of the sector.

India's Supreme Court is seeking answers from the Centre on why it hasn’t formed “clear-cut” crypto regulations. #India #CryptoRegulation #SupremeCourt ￰1￱ — ￰16￱ (@cryptonews) May 20, 2025 In parallel, the Central Board of Direct Taxes (CBDT) has asked exchanges whether existing rules adequately cover derivatives and cross-border trades and whether the current tax burden is proving ￰17￱ leaders have echoed those ￰18￱ CEO Sumit Gupta has called for a parliamentary committee and a dedicated Web3 working group to chart a long-term roadmap and align India with global ￰19￱ will enable automatic crypto transaction data sharing, tighter compliance and better regulatory transparency by adopting the OECD’s CARF rules. #IndiaCrypto #CARF #CryptoReproting ￰2￱ — ￰20￱ (@cryptonews) September 3, 2025 At the same time, India has committed to implementing the OECD’s Crypto-Asset Reporting Framework (CARF) by April ￰21￱ system will require automatic reporting of crypto transactions worldwide, part of a push to strengthen compliance and improve ￰22￱ cautious stance reflects years of shifting ￰23￱ 2021, the government drafted a bill to ban private cryptocurrencies but never tabled it in ￰24￱ its G20 presidency in 2023, India instead pressed for a global regulatory ￰25￱ following year, it postponed a discussion paper on domestic policy, saying it would wait for clarity from the United ￰26￱ then, Washington has advanced its own position with the GENIUS Act , which sets federal rules for stablecoins and crypto investment.