Navigating India's Evolving Crypto Regulatory Landscape

India’s cryptocurrency scene is growing fast. Over 107 million people are now active in the market, which is valued at around $6.4 billion. But with growth comes uncertainty. Rules are still evolving and the government is trying to balance innovation with safety for investors.

Recent developments show that India is moving toward clarity. The FIU-IND recently sent notices to 25 offshore crypto platforms, and the Madras High Court recognised cryptocurrencies as property, giving legal recognition to digital assets. At the same time, high taxes, strict compliance, and anti-money-laundering (AML) checks are shaping how people trade crypto.

This blog explains India’s crypto regulations, taxation, and reporting requirements, helping investors make sense of a complex but promising market.

The Rise of Cryptocurrency in India

Crypto first made its way to India with Bitcoin in 2009, but most people only noticed it during the 2017 bull run, when prices shot up nearly 1,900%. Since then, adoption has steadily increased.

By 2025, India is a global leader in crypto adoption. With 800 million smartphones and 900 million internet connections, younger investors, especially those aged 18-35, are driving the market.

Factors like remittances, DeFi yields of 8-15%, and growing interest in staking and blockchain projects keep the momentum going. Despite challenges like exchange hacks and high taxation, India’s crypto community remains strong. Blockchain applications are helping unbanked populations access financial services through remittances, tokenisation, and digital identity.

Legal Status of Cryptocurrency in India

In India, cryptocurrency isn’t banned, but it’s not recognised as legal tender either. Instead, it is treated as a Virtual Digital Asset (VDA) under the Income Tax Act.

In 2020, the Supreme Court overturned the RBI’s banking restrictions, giving crypto exchanges access to payment systems again. In 2025, the Madras High Court recognised crypto as property, meaning it can be legally held, traded, or even attached in disputes.

All crypto platforms must follow PMLA and AML rules. Offshore exchanges that don’t comply are blocked, encouraging safe trading on regulated Indian platforms like Giottus.

The government’s 2021 proposed Crypto Bill hasn’t passed, but regulators are clearly moving toward structured oversight instead of outright bans.

Key Milestones in India’s Crypto Regulation

2013: RBI issues warnings about crypto risks.

2018: RBI bans banks from crypto dealings.

2020: Supreme Court lifts the banking ban.

2022: Flat 30% tax on crypto profits introduced.

2023: FIU mandates VDA registration.

2025: GST at 18% on exchange services; Madras High Court recognises crypto as property; FIU blocks 25 offshore platforms.

These steps show India is shifting from restriction to a regulated market, giving investors more confidence.

Taxation of Cryptocurrency in India

India’s crypto tax rules are strict but straightforward:

30% flat tax on profits, plus 4% cess (~31.2% total)

1% TDS on transactions above Rs 50,000

18% GST on crypto exchange services

Losses cannot offset other gains or be carried forward

Investors must report profits and holdings under Schedule VDA in ITR-2 or ITR-3. These rules aim to increase transparency and discourage speculative trading.

The FIU and Reporting Requirements

The Financial Intelligence Unit (FIU-IND) ensures crypto compliance. From 2023, all Virtual Digital Asset Service Providers (VASPs) must register under PMLA.

Exchanges are required to:

Verify users with KYC checks

Report large or suspicious transactions

Submit periodic audits

Offshore exchanges that don’t comply are blocked. This gives users confidence in registered platforms like Giottus, where funds are safe and transactions transparent.

Privacy Coins, Mining, and DeFi

Privacy coins like Monero (XMR) and Zcash (ZEC) are under watch, but not banned. Mining is legal and taxed as business income, though some states limit energy use.

DeFi, staking, and yield farming are taxable but currently unregulated. Clearer rules are expected as adoption grows, especially with more value locked in DeFi projects.

The Future of Crypto in India

India’s crypto market could grow to $50 billion by 2030. Opportunities include:

Blockchain-based remittance solutions

Tokenisation of real-world assets

DeFi-driven financial inclusion

Challenges such as regulatory uncertainty, taxes, scams, and volatility still impact investor confidence. Institutional participation is likely to increase once licensing and custody rules are in place.

The launch of India’s CBDC (e-Rupee) is another milestone. Combining CBDCs with private crypto could foster regulated innovation, helping India build a mature, digital finance ecosystem.
 

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.