In a surprising move, the Indian government, historically not a fan of crypto, is reassessing its regulatory stance due to the growing acceptance and adoption of digital currencies worldwide. This information comes from a report by Reuters where Ajay Seth, India’s economic affairs secretary, stated that cryptocurrencies “Don’t adhere to national boundaries”, indicating that India does not wish to miss out on the ongoing digital currency revolution.
The revelation of a potential policy shift coincides with the introduction of a new tax of up to 70% on previously undisclosed crypto profits under India’s Income Tax Act. This change in the government’s approach mirrors the high-level game theory suggested by crypto enthusiasts and Bitcoin purists, who argue that the acceptance of digital currencies by one or two countries would instigate a global race to amass these assets.
The Indian government currently imposes a 30% capital gains tax on crypto assets, without any differentiation between long-term investments and short-term trading. Amit Kumar Gupta, a Supreme Court of India legal practitioner, described these taxes as excessively harsh and intended to deter the growth of permissionless blockchain technology.
Gupta further explained that the Indian authorities view cryptocurrencies as “More harmful than gambling”. He told Cointelegraph that the government’s viewpoint is essentially: “We will not use or permit the use of cryptocurrency because this technology is solely for money laundering and terrorist financing — such activities”.
Shaktikanta Das, the ex-governor of the Reserve Bank of India (RBI), lauded the central bank’s initiation of a central bank digital currency (CBDC) pilot project. In his farewell speech in December 2024, Das referred to CBDCs as “The future of currency” and stated that the country is gradually transitioning towards a CBDC-centric economy.
Just before Das’s exit, the RBI announced plans to broaden its cross-border payment platform in November 2024 by seeking more trading alliances. The bank is considering CBDCs as the chief settlement tool between countries using the cross-border payment platform, which could potentially take the form of a wholesale CBDC.
