Market News

Crypto Regulation and Tax Reforms: India's Road to a Thriving Web3 Ecosystem

The Indian government and the Bharat Web3 Association (BWA) are currently at a critical juncture regarding the future of cryptocurrency in India.

This week, the BWA presented its budget demands to the Finance Ministry, framing them as essential for salvaging India's crypto industry ahead of the 2026 Budget.

With nearly $42 billion in trading volume migrated overseas since the introduction of hefty taxes in 2022, the stakes are incredibly high for domestic players.

The BWA's key demands revolve around reducing the punitive 30% tax rate and the 1% TDS, which they argue hamper market liquidity and high-frequency trading.

Additionally, they seek to allow investors to offset losses on crypto trades, bringing these digital assets in line with traditional financial instruments.

Another critical aspect of their demands is for clearer banking access for startups that have encountered financial barriers despite a prior Supreme Court ruling.

Meanwhile, the government has ramped up regulations, registering nearly 50 cryptocurrency exchanges under the Prevention of Money Laundering Act.

Regulators are actively targeting non-compliant exchanges, which has resulted in substantial penalties and increased scrutiny on all market participants.

For India's crypto industry to thrive, both sensible tax reforms and rigorous compliance measures will be essential in retaining talent and investment domestically.

The coming months will be pivotal as the government assesses these recommendations and navigates the balance between regulation and innovation.