{"id":44601,"date":"2025-06-02T20:50:45","date_gmt":"2025-06-02T15:20:45","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=44601"},"modified":"2025-06-02T20:51:03","modified_gmt":"2025-06-02T15:21:03","slug":"virtual-assets-regulation","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/02-06-2025\/virtual-assets-regulation","title":{"rendered":"Regulating India\u2019s Virtual Digital Assets Revolution"},"content":{"rendered":"\n<p><strong>Syllabus :GS3\/Economy&nbsp;<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>In News<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India leads in grassroots crypto adoption, with $6.6 billion invested by retail investors and 800,000 jobs expected by 2030, but faces unclear and challenging Virtual Digital Assets regulations.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What are Virtual Digital Assets?\u00a0<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>They are electronically stored, transferable, or tradable digital representations of value. They include:\n<ul class=\"wp-block-list\">\n<li>\u00a0<strong>Cryptocurrencies<\/strong>: Digital or virtual currencies that are secured through cryptographic techniques, making them highly resistant to counterfeiting.<\/li>\n\n\n\n<li><strong>NFTs (Non-Fungible Tokens):<\/strong> Unique digital assets, recorded on a blockchain, and tradable for money, cryptocurrencies, or other NFTs.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>VDAs can be used for payments, investments, or as representations of real-world items such as artwork, real estate, personal identities, or property rights.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Legal framework<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s Income Tax Bill, 2025 introduces a clear legal framework classifying Virtual Digital Assets (VDAs)\u2014including cryptocurrencies and Non-Fungible Tokens (NFTs)\u2014as property and capital assets for the first time.\u00a0<\/li>\n\n\n\n<li>This aligns India with global practices in countries like the U.K., U.S., and Australia.<\/li>\n\n\n\n<li>Under the bill, gains from the sale or transfer of VDAs will be taxed under capital gains provisions, similar to real estate and stocks.\n<ul class=\"wp-block-list\">\n<li>\u00a0This move ensures VDAs are taxed transparently and reduces their potential misuse as unregulated financial instruments.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>In March 2023,<\/strong> the government brought VDAs under the ambit of the \u2018Prevention of Money Laundering Act, 2002 (PMLA)\u2019, ensuring that transactions involving these assets fall within its scope.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Do you know?<\/strong><br>&#8211; Global bodies like the IMF and FATF advocate for risk-based, harmonized regulation relying on compliant domestic intermediaries called Virtual Asset Service Providers (VASPs).\u00a0<br>&#8211; These VASPs help align the crypto industry with laws, improve oversight, and provide regulatory insights.<br>&#8211; Indian VASPs are maturing rapidly, cooperating with authorities to strengthen anti-money laundering and counter-terrorism efforts.<br>&#8211; Following a major $230 million hack in 2024, Indian exchanges enhanced cybersecurity, created insurance funds, and established industry-wide guidelines to protect users and assets.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Challenges\u00a0<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s strict capital controls and regulated payment systems clash with the decentralized nature of Virtual Digital Assets (VDAs).\u00a0<\/li>\n\n\n\n<li>The Reserve Bank of India (RBI) raised concerns early on, banning financial institutions from crypto dealings in 2018\u2014a ban overturned by courts in 2020.\u00a0<\/li>\n\n\n\n<li>The government then introduced taxation measures in 2022, including a 1% TDS on VDA transactions above \u20b910,000 and a 30% capital gains tax without loss offsetting.\u00a0<\/li>\n\n\n\n<li>Despite these efforts, most trading shifted offshore, resulting in significant tax revenue losses (over \u20b92,488 crore) and high volumes on non-compliant platforms.\u00a0<\/li>\n\n\n\n<li>Attempts to block these platforms have been largely ineffective, as users circumvent restrictions using VPNs and alternative access methods.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Supreme Court\u2019s observations\u00a0<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>In May 2025, the Supreme Court highlighted the lack of comprehensive crypto regulation, noting that banning crypto ignores the market\u2019s reality, underscoring the disconnect between policy and the vibrant crypto ecosystem.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Suggestions and Way Forward\u00a0<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India is rapidly emerging as a global leader in the adoption of Virtual Digital Assets (VDAs), including cryptocurrencies and NFTs.<\/li>\n\n\n\n<li>And to harness the full potential of VDAs, India needs a balanced and forward-looking regulatory framework.\n<ul class=\"wp-block-list\">\n<li>Such a framework would support innovation, protect investors, and ensure tax compliance, ultimately securing India\u2019s position as a leader in the digital asset revolution.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p>Source :TH<\/p>\n","protected":false},"excerpt":{"rendered":"<h3><strong>In News<\/strong><\/h3>\n<li class=\"ms-5\">India leads in grassroots crypto adoption, with $6.6 billion invested by retail investors and 800,000 jobs expected by 2030, but faces unclear and challenging Virtual Digital Assets regulations.<\/li>\n<p><\/p>\n<h3><strong>Challenges\u00a0<\/strong><\/h3>\n<li class=\"ms-5\">India\u2019s strict capital controls and regulated payment systems clash with the decentralized nature of Virtual Digital Assets (VDAs).\u00a0<\/li>\n<li class=\"ms-5\">The Reserve Bank of India (RBI) raised concerns early on, banning financial institutions from crypto dealings in 2018\u2014a ban overturned by courts in 2020.\u00a0<\/li>\n<li class=\"ms-5\">The government then introduced taxation measures in 2022, including a 1% TDS on VDA transactions above \u20b910,000 and a 30% capital gains tax without loss offsetting.\u00a0<\/li>\n<li class=\"ms-5\">Despite these efforts, most trading shifted offshore, resulting in significant tax revenue losses (over \u20b92,488 crore) and high volumes on non-compliant platforms.\u00a0<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/02-06-2025\/virtual-assets-regulation\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-44601","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/44601","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=44601"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/44601\/revisions"}],"predecessor-version":[{"id":44612,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/44601\/revisions\/44612"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=44601"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=44601"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=44601"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}