01 Read
What happened
India levies a 30% tax on crypto gains and routes exchanges through FIU registration, yet no legislation defines whether SEBI, RBI, or a new body holds regulatory authority over virtual digital assets. Multiple agencies claim partial jurisdiction — RBI over payment risks, SEBI over securities-like tokens, ED under FEMA and PMLA — but no unified framework exists. The Inter-Ministerial Committee and successive consultation rounds have not produced a Crypto Bill, leaving exchanges operating under fragmented, overlapping oversight.
02 Understand
Why it matters
India's crypto governance gap is a structural problem, not merely a legislative delay. Three agencies assert partial authority without a master statute to resolve conflicts.
RBI treats crypto as a monetary and financial-stability risk. Its 2018 circular banning bank dealings with crypto exchanges was struck down by the Supreme Court in Internet and Mobile Association of India v. RBI (2020), but RBI's hostility to private cryptocurrencies remains explicit in annual reports and governor statements.
SEBI's interest is triggered when a token resembles a security or derivative. Post the 2023 global push following FTX's collapse, SEBI submitted to the Finance Ministry that it could regulate crypto assets that behave like securities, while a separate regulator handles commodity-like tokens.
The Enforcement Directorate and Financial Intelligence Unit operate under PMLA and FEMA. Since 2023, Virtual Asset Service Providers (VASPs) must register with FIU-IND — this is currently the only mandatory compliance gate for exchanges operating in India.
The Parliamentary Standing Committee on Finance and the Inter-Ministerial Committee both recommended a law, but the Cryptocurrency and Regulation of Official Digital Currency Bill has not been tabled. Meanwhile, India's 30% tax on VDA gains (Section 115BBH, Finance Act 2022) and 1% TDS (Section 194S) treat crypto as property for tax purposes — without confirming its legal character.
This 'regulate-by-taxation-without-a-law' approach is precisely what competitive exams test: which body does what, under which statute, and what remains unresolved.
RBI treats crypto as a monetary and financial-stability risk. Its 2018 circular banning bank dealings with crypto exchanges was struck down by the Supreme Court in Internet and Mobile Association of India v. RBI (2020), but RBI's hostility to private cryptocurrencies remains explicit in annual reports and governor statements.
SEBI's interest is triggered when a token resembles a security or derivative. Post the 2023 global push following FTX's collapse, SEBI submitted to the Finance Ministry that it could regulate crypto assets that behave like securities, while a separate regulator handles commodity-like tokens.
The Enforcement Directorate and Financial Intelligence Unit operate under PMLA and FEMA. Since 2023, Virtual Asset Service Providers (VASPs) must register with FIU-IND — this is currently the only mandatory compliance gate for exchanges operating in India.
The Parliamentary Standing Committee on Finance and the Inter-Ministerial Committee both recommended a law, but the Cryptocurrency and Regulation of Official Digital Currency Bill has not been tabled. Meanwhile, India's 30% tax on VDA gains (Section 115BBH, Finance Act 2022) and 1% TDS (Section 194S) treat crypto as property for tax purposes — without confirming its legal character.
This 'regulate-by-taxation-without-a-law' approach is precisely what competitive exams test: which body does what, under which statute, and what remains unresolved.
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