India’s Evolving Crypto Landscape

As India signals a recalibration of its crypto policies, crypto service providers are targeting the Indian market.

Policy Changes

National jurisdictions are changing their stance on crypto, led by Donald Trump’s pro-crypto agenda, prompting India to recalibrate as well. Although India had initially planned to release a consultation paper on crypto regulation after its G20 presidency in 2023, the government has yet to follow through. In a recent roundtable discussion, Ajay Seth, Secretary of India’s Department of Economic Affairs, stated, “We were ready with a discussion paper, but we now need to recalibrate it due to these changes.”

Current Taxation Impact

The Indian government levies a 30% tax on income from crypto and a 1% tax deducted at source, implemented in 2022. This taxation has deferred many retail and institutional traders, resulting in low trading volumes on crypto trading platforms. Consequently, many crypto exchanges and market makers have exited the Indian market. For example, WazirX, once India’s largest crypto trading platform, experienced a 90% drop in business following these tax implementations, leading it to relocate part of its operations to Dubai.

Renewed Interest

Despite previous setbacks, signs of a shift in crypto policies have reinvigorated interest among crypto firms in re-entering the Indian market, according to Bloomberg. On March 11, Coinbase registered with India’s Financial Intelligence Unit to launch its retail trading platform. This follows other registrations by competitors like Binance, Bybit, and KuCoin.

Global Trends

India’s indication of recalibration is part of a broader global trend where countries are creating favorable environments for crypto traders and service providers. Beyond the U.S. and European Union, notable examples include:
– Hong Kong: Introduced regulatory measures for tokenization and allowed exchange-traded funds investing in digital currencies.
– Australia: Launched a regulatory approach to digital assets, covering governance standards and stablecoin regulations.
– UAE: Established regulatory frameworks to attract crypto firms through the Dubai Financial Services Authority and Abu Dhabi Global Market (ADGM).