India’s Crypto Conundrum: Why Immediate Regulation is Crucial for Growth

As Web3 and the crypto ecosystem rapidly evolve, India finds itself at a crossroads—seize the opportunity to become a global leader or risk falling behind due to inaction. Despite hosting the G20 Summit and leading discussions on global crypto regulation, India’s policy on Virtual Digital Assets (VDAs) and Web3 remains stagnant, even as other G20 nations push forward with comprehensive regulations.

This lack of progress is surprising, given India’s strong foothold in fintech, its massive tech-savvy population, and the economic potential of the crypto sector. Without clear regulations, India risks losing high-quality jobs, investment opportunities, and security in the rapidly growing digital economy.

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Global Crypto Regulations Are Moving Ahead—India Can’t Afford to Lag
While India remains indecisive, other major economies are setting the pace. Brazil has integrated blockchain into its financial system with the Digital Real (Drex), and Argentina is fostering a crypto-friendly environment with tax reforms under President Javier Milei. The European Union’s Markets in Crypto Assets Regulation (MiCAR) is now in effect, while both the UK and the US are in the final stages of comprehensive crypto laws. The recent appointment of crypto-friendly officials, including Paul Atkins to lead the SEC under President Trump, signals a shift towards greater adoption in the US.

In Asia, South Korea’s Virtual Asset User Protection Act (VAUPA) is ensuring transparency and investor protection, while Japan’s fully regulated stablecoin market is thriving. Even China, despite its crypto ban, has updated its Anti-Money Laundering (AML) laws to address virtual asset transactions.

Smaller jurisdictions like Singapore, Hong Kong, and the UAE are aggressively building sophisticated crypto regulations, attracting top Web3 companies and talent—many of them originally from India. Initiatives like Project Guardian in Singapore and Ensemble in Hong Kong show how strategic policy can foster innovation.

Despite regulatory uncertainty, India remains one of the largest adopters of crypto globally, with immense potential in Web3. The global crypto market is valued at over $2 trillion, and according to NASSCOM, India’s crypto-tech industry could be worth $241 million by 2030 if the right policies are in place.

However, outdated tax policies are driving traders and companies offshore. The 1% TDS on crypto transactions has severely impacted domestic trading volumes, pushing users to foreign platforms. Countries like Brazil and Switzerland have shown that lower, simplified tax structures increase compliance and boost tax revenue. India must learn from these models and correct the current situation—where taxation exists without clear regulation.

Also read: Starbucks CEO Earned $96 Million in Just Four Months, Outpaced Tech Giants, and Flew 1,600 km Weekly

The Cost of Inaction

The urgency to regulate crypto becomes even clearer when considering India’s heavy infrastructure investments. The government spent over ₹4,100 crore on hosting the G20 Summit, including ₹3,600 crore on the Bharat Mandapam in New Delhi, to strengthen its global leadership position. However, without follow-through on key policy commitments, such efforts risk being wasted.

The Vishvasya-Blockchain Technology Stack launched by MeitY is a step in the right direction, but it needs integration with a broader Web3 regulatory framework to maximize its impact. India must now prioritize a clear crypto policy, strategic investments, and active engagement with the sector to remain competitive.

Need regulation, not a ban


Banning crypto is not a solution, as evidenced by multiple countries that attempted prohibition only to reverse course. Instead, India needs smart, balanced regulations that:
• Protect investors from fraud and scams
• Encourage innovation to drive economic growth
• Create a structured tax framework that prevents capital flight
• Strengthen financial security by incorporating crypto into the legal system

With global financial giants like BlackRock and Fidelity launching crypto exchange-traded products (ETPs), the world is moving towards mainstream crypto adoption. India must act swiftly to craft policies that foster a secure, regulated, and thriving digital economy—before the opportunity slips away.

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