Despite Bitcoin hitting record highs, India has no immediate plans to introduce a comprehensive regulatory framework for cryptocurrencies, officially termed Virtual Digital Assets (VDA), according to the government.
Minister of State for Finance Pankaj Chaudhary confirmed on Monday that while consultations with stakeholders have been conducted, there is no set timeline for bringing in regulations for the burgeoning crypto sector.
“The government has undertaken formal and informal consultations with stakeholders, including industry and international organisations, from time to time on policy formulation of crypto assets. There is, however, no timeline for the introduction of comprehensive regulatory guidelines for the VDA industry in India,” Chaudhary stated in a written reply to the Lok Sabha.
Global Influence and Trump’s Win
Bitcoin’s meteoric rise—crossing $106,000 this week—follows renewed optimism among investors after Donald Trump’s US presidential election victory. The market has been buoyed by expectations of a friendlier regulatory stance under Trump’s administration, with Bitcoin climbing 192% so far this year.
This global enthusiasm has spilled over into India, sparking increased demand for regulatory clarity. However, Chaudhary underscored that an effective framework must align with global standards.
“VDAs are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any comprehensive regulatory framework on the subject can be effective only with significant international collaboration on evaluation of the risks and benefits and evaluation of common taxonomy and standards,” he explained.
Current Measures in Place
The government has already taken steps to monitor and regulate VDAs. In March 2023, a notification brought cryptocurrencies under the purview of the Prevention of Money Laundering Act, 2002 (PMLA). Additionally, income from crypto assets is taxed under the Income Tax Act, 1961, while certain aspects fall under the Information Technology Act, 2000, and the Companies Act, 2013.
Chaudhary further highlighted India’s role during its G20 presidency, where the International Monetary Fund (IMF) and the Financial Stability Board (FSB) presented a Synthesis Paper. The paper outlines a global regulatory roadmap for crypto assets, addressing the unique risks faced by emerging markets and developing economies.
“All jurisdictions, including India, are expected to evaluate their country-specific characteristics and risks, and engage with standard-setting bodies and the G20 to consider the necessary measures for crypto assets,” Chaudhary noted.
Balancing Risks and Innovation
India’s cautious approach stems from the need to safeguard its economy and ensure financial stability. While the government acknowledges the importance of innovation, Chaudhary emphasised the need for a balanced stance.
“The need to balance investor protection and innovation must be assessed in the light of the broader objective of protecting the Indian economy from the risks posed by VDAs while maintaining the financial and monetary stability of the economy,” he said.
Given the cross-border and digital nature of cryptocurrencies, Chaudhary warned that investor protection measures can only mitigate risks to a limited extent.
For now, any further steps—including the publication of a discussion paper—will depend on the evaluation of risks and a final stance by the government. No specific timeline has been set for these measures.
Future Uncertainty
While India’s cautious approach persists, the rapid adoption of cryptocurrencies globally raises questions about how long this regulatory ambiguity can continue. For now, India appears to be watching the international landscape, prioritising financial stability over swift regulatory action.
