India remains behind major markets in the crypto regulation race, but it has not ignored the sector. The country has built tax, anti-money laundering, and monitoring rules while avoiding a full law for virtual digital assets.
That cautious model is drawing attention after Coinbase returned to India. The comeback has highlighted the market’s appeal and the limits of India’s unclear policy approach.
At India Blockchain Week, Coinbase Asia-Pacific director John O’Loghlen called India a “North Star” for the exchange. The remark came as Coinbase outlined its renewed market push.
Coinbase secured registration with India’s Financial Intelligence Unit in early 2025. It reopened user registrations by October. By December, it had restored services for retail investors.
The platform also introduced IMPS-enabled INR deposits. The feature allows compliant Indian rupee deposits into the crypto ecosystem and gives traders a local currency route.
However, India’s central bank remains opposed to legalising crypto. The Economic Times reported that the Reserve Bank of India told a parliamentary panel that virtual digital assets are a threat to an emerging economy like India.
The RBI compared India with other markets. It told the Parliamentary Standing Committee on Finance that China and Qatar have banned such activity. It said Europe has allowed digital assets under strict regulation.
According to a report, the RBI said VDAs should not be legalised in India at this stage. It warned that digital assets could be used for terror funding and narcotics smuggling.
The central bank also raised concerns about offshore platforms. It said entities outside India are difficult to track, creating enforcement problems for regulators.
After the meeting, committee head Bhartruhari Mahtab said the RBI was against legalising VDAs in India. He also said the panel had reviewed audit aspects under income tax law.
The Institute of Chartered Accountants of India took a different position. It supported a comprehensive VDA law and offered guidance to improve reporting and compliance clarity.
India’s framework is narrower than the European Union’s model. The EU has MiCA, a common crypto rulebook for member states. The UK is also moving toward a full regime from October 2027, while Japan is studying wider stablecoin and crypto ETF rules.
The Financial Intelligence Unit has tightened supervision. It issued AML and CFT guidelines for virtual digital asset service providers in January 2026. Earlier, the FIU issued notices to 25 offshore VDA service providers for non-compliance.
Tax rules form another major pillar. Section 115BBH taxes income from virtual digital asset transfers at 30%. The Income Tax Department also treats VDA transfer losses as nil. India applies a 1% tax deducted at source under Section 194S. This helps the government track transactions.
However, policy gaps continue to weigh on the sector. India still has no full crypto law, leaving builders, investors, and global exchanges without clear rules. Reuters reported that officials fear a formal framework could legitimise crypto and make the sector systemic.
For now, India is not leading the crypto regulation race. It has built a containment-first model with strong tax and AML controls. It needs clearer licensing and stronger user protection to compete globally.
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