While many countries are moving from doubt to clear plans for digital assets, India remains stuck in confusion.
Today, the government treats Virtual Digital Assets (VDAs) in a strange way. It taxes them as if they are fully legal, but regulates them as if they are risky or unwanted.
Investors pay a high 30% capital gains tax and a 1% TDS on every transaction. This means the government collects money from crypto users but does not give them proper legal protection.
India’s crypto market still lacks clear rules, strong investor protections, and a dedicated system to curb money laundering.
As a result, millions of Indians face heavy taxes without basic safeguards. This concern was raised in the Rajya Sabha during the Union Budget 2026–27 debate by MP Raghav Chadha.
MP Raghav Chadha on India’s crypto status
In the Union Budget 2026–27 speech, titled “The Good, The Bad, and The Way Forward,” Chadha warned that unclear rules are not stopping crypto.
Instead, they are pushing investors and companies to move abroad. Many are choosing places like Dubai and Singapore, where laws are clearer and more supportive.
Because of this, India is losing talent, investment, and future tax income. To combat this, Chadha suggested,
“Legalise virtual digital assets like an asset class.”
Additionally, more than 12 crore Indian investors use foreign platforms to avoid local restrictions, and as a result, around ₹4.8 lakh crore in trading volume has moved overseas.
This is not a small loss, as nearly 73% of India’s total VDA trading now happens on foreign exchanges. At the same time, about 180 Indian crypto startups have shifted their headquarters to countries with friendlier rules.
Solution offered by the MP
Moving forward with his speech, Chadha also pointed out that ignoring crypto is not the solution. Instead, he believes India should regulate it strictly but keep it within the country.
He said,
“Let us not fear innovation, let us regulate it.”
This means setting clear rules, strong compliance systems, and proper oversight, so businesses and investors can operate safely at home.
If India gives VDAs clear legal status as an asset class, it can start reversing this brain drain.
Chadha suggested,
“A clear domestic regulatory sandbox, with strong AML guardrails can bring activity back onshore, protect investors, improve compliance and add ₹15,000–20,000 crore in annual tax revenue.”
In fact, creating a strong regulatory system with strict anti-money laundering checks would protect users from fraud and build trust in the market.
He added,
“My suggestion is that we need to heavily regulate it, ringfence the ecosystem, and strengthen the AML guidelines. Prohibition is not protection, regulation is protection.”
India’s crypto adoption index
Meanwhile, the Chainalysis 2025 Global Adoption Index also shows that India has missed a major opportunity in the crypto space.
In North America, governments have made crypto more acceptable by allowing spot ETFs and building strong systems for large investors.
In comparison, India remains a leader mainly because of its large population and strong public interest, not because of good policy support.
Thus, Raghav Chadha’s insights expose the limits of India’s Union Budget 2026. The bigger question is whether the government will act on these concerns, an issue that remains unresolved.
Final Thoughts
- Treating crypto as a risk instead of an opportunity has cost India talent, innovation, and future revenue.
- High taxes and weak regulation are pushing investors, startups, and trading activity out of the country.
