Cryptocurrency Regulations in India: Legal Status, AML Compliance, and Tax Implications (Year 2024)
India has taken a significant step forward in its approach to cryptocurrencies, moving from an uncertain and fragmented regulatory environment towards a more comprehensive and supportive framework. This shift is largely due to the introduction of the COINS Act 2025, a pioneering piece of legislation that aims to integrate cryptocurrencies into the broader financial system.
The COINS Act, which stands for the Cryptocurrency and Regulatory Oversight for Digital Asset Stability Act, eliminates the previously imposed 30% tax on crypto gains, introduces self-custody rights for digital assets, and legally recognizes Bitcoin in national reserves. It also proposes the establishment of an independent regulatory authority called the Crypto Asset Regulatory Authority (CARA) to oversee crypto activities.
One of the key features of the COINS Act is its approach to taxation. Until the Act's full implementation, cryptocurrencies are taxed at a flat 30% on gains, with no loss set-off allowed. A 1% Tax Deducted at Source (TDS) applies on transfers above ₹10,000, and from July 2025, an 18% Goods and Services Tax (GST) is levied on crypto-related services, such as trading and wallet management, but not on the crypto assets themselves.
The COINS Act also establishes CARA as a dedicated crypto regulator separate from traditional financial bodies like the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). This regulator will implement licensing for centralized platforms while adopting lighter regulations for non-custodial and decentralized protocols. The Act also emphasizes digital rights such as self-custody, privacy, and protocol access.
The Indian crypto sector has faced significant breaches, including a ₹2,000 crore cyberattack on WazirX in 2024 and a $44 million loss due to vulnerabilities in CoinDCX in 2025. These incidents highlight the need for stronger regulatory protections, which the COINS Act attempts to address.
SEBI began monitoring crypto tokens resembling securities from April 2025, and the government is also engaging with international regulatory bodies, such as the Financial Stability Board, to align India's crypto regulations with global standards. India has also begun implementing the Travel Rule, a global standard set by the Financial Action Task Force (FATF), as part of its broader effort to enhance anti-money laundering (AML) and counter-terrorism financing (CFT) measures.
The future of cryptocurrency adoption in India appears promising but uncertain, contingent on the evolving legal and regulatory landscape. The bill, officially known as "The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021," is currently under discussion. If passed, it could potentially play a pivotal role in shaping the future of digital assets in India by introducing an official digital currency by the RBI. However, the bill also imposes restrictions on private cryptocurrencies.
In summary, India in 2025 has taken a significant step towards a more comprehensive, supportive framework for cryptocurrencies through the COINS Act. The Act brings clarity to taxation, establishes new regulatory bodies, and explicitly protects user rights. However, full formal adoption and implementation remain ongoing. The future of cryptocurrency adoption in India will be shaped by the evolving legal and regulatory landscape, with the potential for an official digital currency by the RBI on the horizon.
The COINS Act, introduced in 2025, has significantly revamped the taxation of cryptocurrencies in India, eliminating the 30% tax on crypto gains and proposing a 18% Goods and Services Tax (GST) on crypto-related services. Furthermore, the Act establishes the Crypto Asset Regulatory Authority (CARA) as a dedicated regulatory body for the business of cryptocurrencies, differentiating it from traditional financial authorities like the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).
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