India’s crypto market sits at a crossroads. Courts have begun to recognise digital assets as property, but the government remains wary of granting full legitimacy, relying solely on tax and anti-money-laundering rules.
India’s approach to cryptocurrency is back in the spotlight as courts, regulators and policymakers weigh how far the country should go in recognising and regulating digital assets.
A recent ruling by the Madras High Court described cryptocurrencies as a form of property, reinforcing the idea that tokens can be held in trust and are subject to legal duties of care. The decision gives investors clearer rights in disputes but does not settle the question of how crypto should be regulated at a national level.
Government Still Wary Of Full Legal Framework
A policy document reported in September suggested the central government remains cautious about introducing a full crypto framework. Officials argued that granting digital assets formal recognition could give them “legitimacy” and increase the risk that the sector becomes “systemic” in size.
For now, India relies on a mix of high taxes, strict reporting rules and anti-money-laundering obligations under existing laws. Virtual asset service providers must comply with the Prevention of Money Laundering Act, including detailed customer checks and suspicious-transaction reports.
Industry participants say this patchwork has created uncertainty. Crypto trading remains active, but some platforms have shifted operations abroad and serious projects complain of difficulty raising domestic capital.
Courts Call For Clearer Rules
India’s courts have played a recurring role in shaping the debate. The Supreme Court previously overturned a central-bank banking ban on crypto businesses, arguing that such restrictions must be proportionate and justified.
Recent commentary from legal experts suggests that, as more cases reach the courts, pressure will build on lawmakers to move from ad-hoc measures to a dedicated framework that balances innovation with investor protection.
What Investors And Exchanges Should Watch
Key developments to monitor include:
- Whether the government proposes a bespoke crypto bill, or continues to rely on tax and AML measures
- How courts interpret the property status of crypto in future disputes
- Any further guidance on how decentralised finance projects fit within India’s regulatory perimeter
For now, India remains a huge market with an active user base but an uncertain long-term rulebook. That mix makes it important, but challenging, for exchanges, brokers and investors to navigate.
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