Industry backs Raghav Chadha’s push for legal framework for crypto, stablecoins

Rajya Sabha MP Raghav Chadha, known for raising issues related to economic policy, taxation, and consumer protection, has urged the government to legalise virtual digital assets (VDAs) in India, which could potentially generate ₹15,000–20,000 crore in additional annual tax revenue.

The Aam Aadmi Party MP’s push to legalise digital assets such as cryptocurrencies has reignited a long-simmering debate on whether India’s crypto policy is driving capital and innovation out of the country instead of regulating it at home.

Raising the issue during the Budget discussion in the upper house of Parliament, Chadha argued that India must move towards recognising VDAs—including cryptocurrencies, stablecoins, and tokenised real-world assets—as a legitimate asset class rather than allowing the ecosystem to steadily migrate offshore.

“Cryptocurrencies and other virtual digital assets are taxed in India as if they are legal—at a flat 30% income tax and transaction levies—but regulated as if they are illegal,” he pointed out.

He added that prohibition is not protection, but regulation is protection.

Budget retains 30% crypto tax, introduces ₹50,000 penalty for reporting lapses

In India, the 30% flat tax on capital gains from VDAs has been applicable since April 1, 2022, while the 1% tax deducted at source (TDS) on every trade became effective on July 1, 2022.

The Union Budget 2026 proposed additional penalties for non-furnishing or inaccurate reporting of crypto-asset transactions. Under the proposal, a penalty of ₹200 per day will be levied for delays in filing statements, while a flat ₹50,000 fine will apply in cases of inaccurate reporting or failure to correct errors. The provisions will come into effect from April 1, 2026.

Yet, despite this heavy taxation, the sector continues to operate without formal legal recognition, a dedicated licensing regime, or a comprehensive investor protection framework.

While the Financial Intelligence Unit (FIU-IND) has issued AML (anti-money laundering) and CFT guidelines for VDA entities, the absence of a clearly defined regulatory perimeter has left the industry in limbo.

According to Chadha, nearly 12 crore Indians invest via overseas platforms, with around ₹4.8 lakh crore worth of VDA transactions shifting offshore. Besides, 73% of India's trading volume has shifted to foreign exchanges, while close to 180 Indian crypto startups have relocated to jurisdictions such as Dubai and Singapore in search of regulatory clarity.

Chadha’s remarks echo industry concerns

Industry leaders say the MP’s remarks echo what the sector has been flagging for years. Sumit Gupta, co-founder of CoinDCX, called Chadha’s intervention “both relevant and timely,” noting that global regulators have increasingly recognised the economic value of digital assets and have moved to regulate rather than suppress them.

“Standard-setting bodies such as the Financial Stability Board, the IMF, and FATF have released comprehensive guidelines on VDAs, which countries are adapting to their domestic contexts,” Gupta said. He added that India’s current tax and compliance architecture has unintentionally pushed activity to offshore, non-compliant platforms, a trend backed by multiple independent assessments.

While FIU-IND’s AML framework is a step forward, Gupta stressed that offshore platforms serving Indian users must also be brought under the same regulatory and tax obligations to create a level playing field.

SB Seker, head of APAC at Binance, said economies worldwide are setting clear rules to attract innovation while enforcing compliance. “As India emerges as a key growth engine of the Global South, the opportunity lies in shaping guardrails that protect consumers, retain talent, and enhance value creation,” he said, underscoring the need for sustained dialogue between policymakers and the industry.

Prohibition is not protection

Echoing similar views, Raj Karkara, COO of ZebPay, said Chadha’s remarks reinforced a fundamental truth for the crypto ecosystem: “Prohibition is not protection. Regulation is protection.”

Calling for digital assets to be recognised as a distinct asset class, Karkara said strong AML ring-fencing and bringing offshore activity back onshore would strengthen the financial system. As an FIU-registered exchange, ZebPay, he added, has consistently supported stringent compliance to retain Indian capital and build trust.

WazirX founder Nischal Shetty highlighted the unintended consequences of India’s current tax regime. While acknowledging that safeguards have improved under FIU oversight, he said high taxes, the inability to set off losses, and a stringent TDS framework have pushed investors to bypass domestic platforms altogether.

“This has externalised risk, moved activity beyond India’s jurisdictional safeguards, and led to a loss of hundreds of crores in potential tax revenue,” Shetty said.

Derivatives-focussed platform Pi42 also welcomed the renewed policy discussion. CEO Avinash Shekhar said there is growing recognition that VDAs should be governed rather than sidelined. “Capital, talent, and trading activity already exist—but outside the domestic system,” he said. A predictable regulatory and tax framework, Shekhar added, could redirect this activity back into India, improve transparency, and strengthen market integrity.

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