India’s crypto ecosystem remained active this week, shaped by a mix of regulatory caution, steady retail participation and growing industry expectations for clearer long-term rules. While trading remains legal under the virtual digital asset (VDA) framework, policy signals from regulators continue to emphasise risk management and financial stability.
RBI reiterates warnings amid rising crypto interest
The Reserve Bank of India (RBI) repeated its concerns over private cryptocurrencies, calling them a threat to financial stability and warning against speculative retail activity. Officials noted that crypto assets remain highly volatile and should not be viewed as a substitute for regulated financial products.
Despite the warnings, trading volumes on several domestic exchanges remained steady, supported by improved global sentiment and a slight rebound in major crypto assets.
Government reviews VDA compliance and tax performance
Senior officials have begun reviewing the efficiency of India’s VDA framework, including the 30% tax on gains and the 1% TDS on crypto transactions. The review comes as industry groups continue to push for revised taxation parameters, arguing that high TDS rates reduce liquidity and push traders toward offshore platforms.
While no policy changes have been indicated, the ongoing evaluation suggests the government is monitoring both compliance and revenue performance closely.
Industry seeks clarity on exchange licensing and regulatory roadmap
Crypto exchanges and fintech organisations have renewed calls for a clearer licensing regime to bring platforms under a unified regulatory structure. Many firms argue that defined licensing norms would strengthen consumer protection and help India build a more stable digital-asset environment.
Industry leaders also expressed hope that India’s upcoming digital economy roadmap will include updated guidance on custody, platform audits and responsible advertising norms.
CBDC progress continues as retail pilots expand
India’s central bank digital currency (CBDC) programme saw incremental progress, with fresh test integrations in retail payment systems. Additional banks have joined the pilot phase, experimenting with P2P transfers, merchant settlements and offline payments.
The RBI remains focused on expanding the digital rupee ecosystem as a safer, government-backed alternative to decentralised crypto assets.
Retail activity stays resilient despite policy uncertainty
Domestic exchanges reported stable user activity throughout the week, supported by a moderate recovery in global markets and rising interest from younger investors. India continues to rank among the largest retail crypto markets worldwide, with participation driven by long-term interest in digital assets despite taxation hurdles and regulatory ambiguity.
India remains at a crossroads in its crypto journey—balancing strong retail demand with a regulatory framework rooted in caution. While authorities continue to prioritise financial stability and CBDC development, the industry widely expects 2026 to bring clearer direction on taxation, licensing and exchange regulations.
