India Crypto Adoption Leads World, But Rules Lag
Why in the news
Commentary in June 2025 flagged a mismatch: India leads in everyday crypto use, yet its rules are patchy and trading keeps moving abroad.
Key facts
- Indian retail investors put in $6.6 billion; NASSCOM sees 800,000+ jobs by 2030.
- The country has a large, fast-growing pool of web3 developers.
- In May 2025 the Supreme Court faulted the missing crypto policy, saying a ban may ignore ground reality.
| 2022 tax rule | Section | Rate |
|---|---|---|
| TDS on transfers above ₹10,000 | 194S | 1% |
| Tax on gains, no loss set-off | 115BBH | 30% |
The aim was transparency and less speculation; results were limited.
Offshore trading
- July 2022 to Dec 2023: over ₹1.03 trillion went to non-compliant platforms; only 9% of VDAs sat on domestic exchanges, a tax loss of about ₹2,488 crore.
- Dec 2023 to Oct 2024: ₹2.63 trillion offshore, with uncollected TDS above ₹60 billion.
- URL blocking failed as users used VPNs, mirror sites and migration.
Background
- RBI has flagged crypto risks since 2013; its 2018 circular barring institutions from crypto was overturned by the Supreme Court in 2020.
Role of VASPs
- Global bodies back risk-based rules relying on compliant Virtual Asset Service Providers (VASPs), which help oversight and enforcement.
- Current policy pushes users offshore.
- Indian VASPs work with FIU-India on AML/CFT and tightened security after the $230 million hack of 2024.
Exam angle
- TDS: Section 194S; gains tax: Section 115BBH.
- Related terms: VDA, VASP, AML/CFT, FIU-India.