Crypto experts weigh in on what India’s upcoming budget should deliver

As India approaches another Union Budget, the country’s crypto and Web3 community is doing so with restrained expectations, shaped by years of regulatory ambiguity and a policy approach that has prioritised taxation and oversight over formal recognition.

The government has consistently maintained that cryptocurrencies and other virtual digital assets are not legal tender in India.

Beyond that, however, there has been little by way of a comprehensive regulatory framework governing crypto trading, custody, or broader Web3 activity.

The result, industry participants say, is a sector that is taxed, monitored, and scrutinised — but still operating without legal clarity.

This posture has remained broadly unchanged since the introduction of crypto taxation in 2022, and few in the industry expect the upcoming budget to mark a decisive break from that approach.

Instead, expectations are centred on whether the government offers any signals of intent after years of cautious policymaking.

Taxation remains the defining budget legacy for crypto

For India’s crypto ecosystem, the most consequential budget decision to date remains the tax regime announced in the Union Budget of 2022.

The government introduced a flat 30% tax on profits from virtual digital assets, allowing only the cost of acquisition as a deductible expense, alongside a 1% tax deducted at source on transactions.

At the time, the government was explicit that the move should not be interpreted as legal recognition or endorsement of cryptocurrencies.

Finance Minister Nirmala Sitharaman, responding in Parliament, said the decision to tax crypto activity was rooted in fiscal authority rather than regulatory acceptance.

“(Whether it is) legitimate or illegitimate, it is a different question, but I will tax because it is a sovereign right to tax,” Sitharaman said while defending the tax provisions on virtual digital assets.

She further clarified that the imposition of tax did not amount to legalisation, adding that she was “not going to legalise it or ban it at this stage,” and that decisions on banning or otherwise would follow further consultations.

Those remarks have since come to define the government’s stance: crypto activity would be taxed and monitored, but its legal status would remain unresolved.

The tax framework itself has not changed since its introduction. Industry executives argue that while taxation brought virtual digital assets squarely into the formal economy, it did so without offering regulatory safeguards or predictability.

Saravanan Pandian, CEO of crypto exchange KoinBX, said the industry has seen no movement on taxation since 2022.

He said expectations from the current budget are modest, with hopes centred on a review of whether the existing structure is achieving its intended outcomes.

Industry participants have previously argued that the 1% TDS, in particular, affected market liquidity and accelerated the shift of trading activity to offshore platforms.

Several exchanges have said the compliance burden increased even as domestic participation thinned.

What would the industry like to see in Budget 2026

While calls to revisit the tax regime persist, industry voices say the core ask from this budget has evolved.

Rather than tax concessions, the priority has shifted to legitimacy and regulatory clarity.

Sudhakar Lakshmanaraja, founder of Digital South Trust, said the industry’s primary demand is no longer centred on lowering taxes but on defining the rules of the game.

“The industry’s primary ask is not tax cuts but policy clarity. India needs a clear framework on tokenisation, real-world assets, and permissible blockchain use cases. Asking for tax relief without regulatory certainty is not a mature or sustainable demand,” Lakshmanaraja said.

Executives argue that the absence of clear classifications — whether virtual digital assets should be treated as commodities, securities, or a separate asset class — has left businesses operating in a grey zone.

This uncertainty affects long-term investment decisions, institutional participation, and product development, they say.

Pandian echoed this view, saying the ecosystem is broadly aligned with its expectations.

Beyond taxation, he said the industry wants a regulatory structure that encourages innovation while ensuring user protection.

He added that adjustments to transaction-level levies, such as the 1% TDS, could help restore confidence, but only if accompanied by broader policy clarity.

Avinash Shekhar, co-founder and CEO of Pi42, said clearer regulation would enable businesses in the sector to build and invest with greater confidence.

“Clear guidelines on classification, compliance, and governance will help exchanges invest confidently in infrastructure, enhance investor protection, and keep innovation anchored within India’s regulatory perimeter while supporting responsible growth,” he said.

For its part, the government has repeatedly signalled caution.

Sitharaman has previously pointed to the need for global coordination on crypto regulation, noting the cross-border nature of digital assets and the risks they pose to financial stability.

India has also pushed for multilateral discussions on crypto regulation at forums such as the G20, reinforcing the view that domestic policy will move incrementally rather than abruptly.

Asia moves ahead as India waits

India’s prolonged regulatory ambiguity has become more visible as other Asian jurisdictions move ahead with structured approaches to digital assets.

Markets such as Singapore, Japan, Hong Kong, and South Korea have introduced licensing regimes, clearer tax treatments, and defined compliance obligations for crypto businesses.

While the specifics vary, the common thread has been steps towards establishing some form of regulatory clarity — something industry participants say India still lacks.

Pandian described India’s current framework as among the harshest globally from a taxation standpoint, contrasting it with Asian peers that have paired compliance requirements with clearer rules.

India currently is known for the harshest tax regime in the world. Meanwhile, our counterparts in Asia have incorporated sensible regulations that allow room for innovation.

He pointed to jurisdictions such as Japan, where crypto is recognised as legal property within a defined framework, and Singapore, which has positioned itself as a regulated digital asset hub.

Lakshmanaraja warned that continued ambiguity carries economic risks for India.

“Compared to Singapore, Hong Kong, Japan, and the UAE, India’s approach remains tax-heavy and policy-light. While others provide clarity for builders and institutions, India risks losing startups, talent, IP, and capital if ambiguity continues,” he said.

The sentiment is also echoed by Shekhar, who says that clearer regulation will encourage increased participation domestically.

Clearer rules would encourage domestic participation, keep capital and talent onshore, and give users and platforms greater confidence in engaging through a regulated digital asset market.

Beyond the budget: what long-term signals matter

Looking beyond immediate fiscal measures, industry participants say the most meaningful signal from the budget would be intent — an indication that the government views Web3 and blockchain as more than speculative trading activity.

Lakshmanaraja said a strong policy signal would involve recognising blockchain as digital public infrastructure, with applications extending beyond crypto markets.

He pointed to areas such as land records, supply chains, identity systems, and public service delivery as potential use cases where blockchain adoption could improve transparency and efficiency.

Clear intent around tokenisation, land records, supply chains, identity, and public service delivery would show how citizens and the government itself benefit from transparency, efficiency, and cost savings.

Pandian said the ecosystem would also benefit from a single apex regulator overseeing Web3 and digital asset activity, replacing the current patchwork of oversight mechanisms.

He added that reshaping public perception through real-world use cases and limited government adoption could help move the conversation beyond speculation.

Shekhar said policy stability and explicit recognition would go a long way in anchoring innovation domestically.

He argued that a clear, structured framework would improve compliance and transparency, while allowing exchanges and developers to invest confidently in infrastructure and talent.

Shekhar also pointed to India’s consistently high rankings in global crypto adoption studies as evidence of latent demand, arguing that an enabling ecosystem could channel that participation into regulated, onshore markets.

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