Crypto service providers are setting their sights on the Indian market as India hints at a potential shift in its crypto regulations. With national jurisdictions around the world reevaluating their stance on cryptocurrencies, India is now following suit, influenced in part by the pro-crypto agenda of former U.S. President Donald Trump.
Initially, India had planned to release a consultation paper on crypto regulation after its G20 presidency in 2023. However, the government has yet to follow through on this plan. In a recent roundtable discussion, Ajay Seth, Secretary of India’s Department of Economic Affairs, acknowledged the need to recalibrate their approach due to changing circumstances.
One of the key factors affecting the crypto industry in India is the government’s imposition of a 30% tax on income from crypto and a 1% tax deducted at source, which was implemented in 2022. This tax burden has deterred many retail and institutional traders, leading to decreased trading volumes on crypto platforms. As a result, several crypto exchanges and market makers have exited the Indian market, including WazirX, once the country’s largest crypto trading platform, which experienced a significant decline in business.
Despite these challenges, there are signs of a potential turnaround for the Indian crypto market. Coinbase, a leading cryptocurrency exchange, recently registered with India’s Financial Intelligence Unit to launch its retail trading platform, following similar moves by competitors such as Binance, Bybit, and KuCoin. This indicates a growing interest among crypto firms to re-enter the Indian market in anticipation of regulatory changes.
India’s potential recalibration of its crypto policies is part of a broader global trend where countries are creating more favorable environments for crypto traders and service providers. Countries like Hong Kong, Australia, and the UAE have introduced regulatory measures to support the growth of the crypto industry, including tokenization, virtual asset exposure in authorized funds, and regulations for stablecoin issuers.
In February, Hong Kong approved the use of exchange-traded funds investing in digital currencies and proposed regulations for stablecoin issuers. Meanwhile, the Australian government introduced a comprehensive approach to regulate digital assets, covering governance standards, licensing for service providers, custody laws, and stablecoin regulations with minimum capital requirements. Additionally, regulatory frameworks introduced by Dubai Financial Services Authority and the Abu Dhabi Global Market aim to attract crypto firms to the region.
The potential shift in India’s crypto regulations, along with similar developments in other countries, signals a growing acceptance and support for the crypto industry on a global scale. As crypto service providers eye the Indian market, the landscape of the crypto industry in India and beyond is poised for significant changes in the coming months.