When Regulation Becomes a Mirage: India’s Crypto Soap Opera

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In the dim corridors of power, where numbers glitter like frost on a window in a bureaucratic winter, India’s digital assets drift between the practical and the fantastical, as if a polite demon has taken up auditing duties. Regulation here wears a prankster’s smile and calls itself protection, while taxation bows with the gravity of a magician pulling coins from a hat that never quite belonged to the hat in the first place.

Today, the government treats Virtual Digital Assets (VDAs) with a curious twirl of paradox: taxed as though they are respectable citizens, but regulated as though they are mischievous sprites. A carnival of double talk, staged on the budget’s bright-lit stage, where the ledger decides which jokes are legal and which are merely unlucky coincides.

Investors pay a high 30% capital gains tax and a 1% TDS on every transaction. The money leaves them with the polite bow of legality, while the law keeps one eye hidden behind a curtain, offering little in the way of real protection. A tax collector with a velvet glove and a steel heart, you might call it.

India’s crypto market still lacks clear rules, strong investor protections, and a dedicated system to curb money laundering. The fog thickens like a stage prop in a comedy of errors, where the audience wonders if the act is a tragedy or a farce.

As a result, millions of Indians face heavy taxes without basic safeguards. This concern rose in the Rajya Sabha during the Union Budget 2026-27 debate, led by MP Raghav Chadha, who spoke as one might speak to a stubborn octopus: with care, but also with the sense that something slippery is lashed to the chair.

MP Raghav Chadha on India’s crypto status

In the Union Budget 2026-27 speech, titled “The Good, The Bad, and The Way Forward,” Chadha warned that unclear rules are not stopping crypto. They are, in fact, nudging investors and companies to relocate their entire futures to the gleaming shores of Dubai and Singapore, where laws appear more like friendly gatekeepers than snarling trolls. The brain drain is no mere sigh; it is a procession.

Because of this, India is losing talent, investment, and future tax income. To combat this, Chadha suggested,

“Legalise virtual digital assets like an asset class.”

Additionally, more than 12 crore Indian investors use foreign platforms to avoid local restrictions, and as a result, around ₹4.8 lakh crore in trading volume has moved overseas. This is no small trick; nearly 73% of India’s total VDA trading now happens on foreign exchanges. At the same time, about 180 Indian crypto startups have shifted their headquarters to countries with friendlier rules.

Solution offered by the MP

Moving forward with his speech, Chadha also pointed out that ignoring crypto is not the solution. Instead, he believes India should regulate it strictly but keep it within the country’s orbit.

He said,

“Let us not fear innovation, let us regulate it.”

This means setting clear rules, robust compliance systems, and proper oversight, so businesses and investors can operate safely at home without pretending the ocean is a bathtub. If India gives VDAs clear legal status as an asset class, it can start reversing this brain drain.

Chadha suggested,

“A clear domestic regulatory sandbox, with strong AML guardrails can bring activity back onshore, protect investors, improve compliance and add ₹15,000-20,000 crore in annual tax revenue.”

In fact, creating a strong regulatory system with strict anti-money laundering checks would protect users from fraud and build trust in the market.

He added,

“My suggestion is that we need to heavily regulate it, ringfence the ecosystem, and strengthen the AML guidelines. Prohibition is not protection, regulation is protection.”

India’s crypto adoption index

Meanwhile, the Chainalysis 2025 Global Adoption Index shows India has missed a major opportunity in the crypto space. In North America, governments have made crypto more palatable by allowing spot ETFs and building robust systems for large investors. In comparison, India remains a leader primarily because of its vast population and public interest, not because of policy brilliance.

Thus, Chadha’s insights reveal the limits of India’s Union Budget 2026. The larger question remains: will the government act on these concerns, or will the theater continue with a slightly louder microphone but the same old props?

Final Thoughts

  • Treating crypto as a risk instead of an opportunity has cost India talent, innovation, and future revenue.
  • High taxes and weak regulation are pushing investors, startups, and trading activity out of the country.

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2026-02-10 15:29