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FIU Sparks New Debate on Crypto Regulation in India

India's financial landscape is once again under scrutiny as the Financial Intelligence Unit (FIU) reviews the country’s approach to cryptocurrency regulation.

During a recent parliamentary meeting, officials from the FIU and the Central Board of Direct Taxes (CBDT) provided insights on the challenges and enforcement surrounding virtual digital assets (VDAs).

Highlights from the session revealed that the FIU and CBDT are actively tracking fraudulent activities linked to cryptocurrencies and have identified substantial undisclosed income from these transactions.

Despite the Reserve Bank of India's (RBI) stance of not recognizing cryptocurrencies as legal tender, the current tax structure allows trading while imposing a 30% tax on capital gains.

This regulatory ambiguity has fostered confusion among investors, complicating the landscape of cryptocurrency in India, which remains one of the largest markets for digital assets globally.

Chairperson Bhartruhari Mahtab emphasized the need for a clear regulatory framework, suggesting that regulation could be more beneficial than an outright ban.

Globally, countries are increasingly opting for structured regulations over bans, creating a context for India’s ongoing discussions about clearer crypto policies.

The recent meeting indicates a cautious evolution of India's crypto regulation, with a focus on enforcement against fraud and tax evasion while welcoming future regulatory developments.

As industry engagement increases, stakeholders are urging faster consultations to establish definitive guidelines for digital assets.

In summary, while cryptocurrencies in India remain legal and taxed, the absence of cohesive regulatory laws raises the urgency for reform to better align with international standards.