India is expected to unveil a comprehensive discussion paper on digital assets in the coming weeks, reflecting insights from international bodies such as the International Monetary Fund (IMF) and the Financial Stability Board (FSB). This initiative reportedly signals the country’s intent to explore a structured regulatory approach in response to the increasing global legitimacy of digital assets.
The development of this policy paper coincides with shifting global dynamics, notably influenced by the United States’ more favorable outlook on digital assets, particularly following growing support under President Donald Trump.
India is engaging with multiple stakeholders and prioritizing a cautious, consultative process rather than making hasty decisions. The forthcoming document is expected to present a range of regulatory options to help shape the country’s strategic stance on digital currencies in line with global standards.
“India to release the most-awaited discussion paper on crypto in June 2025! My sense is that it will cover the key risks associated with the sector and seek public comments to build further thoughts around crypto policy but no commitment on regulation yet,” said Sumit Gupta, co-founder of CoinDCX, India’s first digital currency unicorn.
“The release of this discussion paper will ‘finally’ provide opportunities to Indian crypto investors/industry players/media to provide comments/feedback on the sector,” Gupta added.
In July 2024, CoinDCX listed the BSV token for trading on its platform, allowing users to have more ways to buy, sell, and trade BSV. With CoinDCX’s roughly 15 million registered users, the listing marks a significant expansion into the Indian market for BSV and demonstrates its potential and possibility in the region.
Earlier this year, Ajay Seth, Secretary of the Department of Economic Affairs, stated that the Reserve Bank of India (RBI) had provided input for a discussion paper on digital assets. However, its publication was postponed due to shifts in the global regulatory landscape, as multiple nations re-evaluated their approaches to digital assets—especially in relation to stablecoins and international payment systems.
Supreme Court slams delay in ‘crypto’ regulation
The intention to speed up the regulation of digital assets comes days after the Supreme Court of India expressed strong dissatisfaction with the federal government’s ongoing delay in establishing a regulatory framework for digital assets. According to a media report, the top court warned that the vacuum in legislation has enabled widespread abuse and financial misconduct. It emphasized that the lack of oversight has allowed digital currencies to be used in ways similar to “hawala,” an illicit and informal system of cross-border money transfers.
The court also flagged practical challenges for law enforcement, particularly when it comes to gathering evidence without a clear legal definition or regulatory standards for digital assets.
These statements emerged during the hearing of a bail application filed by Shailesh Babulal Bhatt, a resident of Gujarat in western India, who faces fraud allegations involving “cryptocurrencies” across several Indian provinces. Although the petition itself was not centered on broader digital asset policy, the bench—comprising Justices Surya Kant and N. Kotiswar Singh—used the occasion to voice apprehensions about the regulatory void in the digital asset space.
More broadly, the court reminded the federal government that it had previously, nearly two years ago, called for a definitive policy direction on digital currencies. While acknowledging that an outright ban on digital assets would be counterproductive, given their growing importance in global finance, the bench stressed the urgent need for regulation.
RBI repeats crypto risks to financial stability
On the other hand, India’s central bank continues to be concerned about digital asset trading, claiming it can hamper financial stability.
“There is no new development in so far as crypto is concerned. There is a committee in the government which is looking after this. Of course, as you are aware, we are concerned about crypto because that can hamper financial stability and monetary policy,” said RBI Governor Sanjay Malhotra during the post-Monetary Policy press conference on June 6.
The RBI has raised concerns about “cryptocurrencies” on multiple occasions. Shaktikanta Das, former RBI Governor, consistently warned that digital assets pose serious risks to the financial system. He argued that digital assets could undermine the banking sector’s stability, complicate efforts to manage inflation during economic crises, and potentially lead to the emergence of an unregulated parallel monetary system. Das was a strong advocate for a complete ban on digital assets, comparing their use to gambling.
However, instead of an outright ban, the government imposed one of the harshest taxation on digital asset trading—30% flat tax on all digital currency income with no provision to offset losses and a 1% tax deducted at source (TDS) on all transactions above Rs 10,000 ($116). This may likely lead to a loss of about $1.2 trillion in trade volume on domestic exchanges, according to a study from Esya Centre, an Indian policy think tank.
RBI’s decision to reduce interest rate positive for crypto
The current RBI’s monetary policy committee, led by Malhotra, recently made headlines by reducing interest rates by 50 basis points to 5.5%. The reduction was more than expected. RBI also lowered the cash reserve ratio, boosting liquidity to support the slowing economy as inflation eases. These bold steps reflect rising concern over India’s economic slowdown and global uncertainties, including U.S. trade tensions.
“Our aspiration is to grow at 8%, and we would like to grow as fast as possible,” the governor said during the post-policy press conference.
The central bank kept its growth forecast at 6.5% for the current fiscal year that began in April but lowered its inflation estimate to 3.7% from 4%. It also warned that there is little room for more rate cuts and said future decisions will be based on new economic data.
“We see the RBI’s decision to reduce the repo rate as a positive signal for continued investor participation in crypto,” Gupta of CoinDCX said in an emailed statement.
“With repo rates at their lowest levels in three years, traditional instruments like fixed deposits may appear less attractive, prompting investors to seek better diversification and returns through alternative assets. At CoinDCX, we are witnessing increased interest from both retail and institutional investors who view crypto as a strategic asset within a well-balanced portfolio.”
