India's cryptocurrency sector is still in an early stage of development. Cryptocurrencies aren't regulated as financial products, but the government has established a robust compliance framework that includes taxation, anti-money laundering (AML) laws and compulsory registration. 

In March 2026, Parliament confirmed there was no proposal under consideration to completely regulate or ban crypto, even though VDAs remained unregulated as a product class, showing India is taking steps toward a regulated cryptocurrency industry.

From Ban Concerns to Compliance

India's crypto policy has undergone a dramatic change in the last six years. The Supreme Court lifted the banking restrictions on crypto exchanges in 2020. The Finance Act 2022 brought a 30% tax on the gains from Virtual Digital Assets (VDA) and 1% TDS on the transactions involving VDA.

In 2023, the regulatory landscape tightened, with VDA service providers falling under the Prevention of Money Laundering Act (PMLA) and requiring them to register with FIU-IND or go through the KYC/AML process.

By March 2026, Parliament reports 54 Virtual Digital Asset service providers (VDASPs) registered with the Financial Intelligence Unit (FIU-IND), and enforcement agencies had shut down 53 non-compliant crypto websites and apps. 

In FY24, the government also received VDA tax of Rs. 437.43 crore as compared with Rs. 269.09 crore in FY23, which has more than doubled the tax contribution from the sector.

Institutions Continue to Hold Different Views

The Indian financial institutions are still split on cryptocurrencies. The RBI has been advocating the Digital Rupee (eRs.) as the preferred option, according to RBI Deputy Governor T. Rabi Sankar, who has stated that stablecoins have "little justification" in the financial system.

However, SEBI has suggested a multi-regulator framework, with crypto assets that were closer to securities than currencies, instead of being banned, might come under its regulation.

The Finance Ministry has taken a pragmatic stance with its announcement, which leaves the crypto trading market alone but concentrates on tax, compliance, and investor disclosures.

Crypto Industry Continues to Expand

According to CoinSwitch, it has more than 2.5 crore registered users, whereas CoinDCX claims to have over 1.5 crore users on its platform and Rs. 1 lakh crore worth of trading volume in a quarter. CoinDCX currently has around $1.2 billion in assets under custody, according to Reuters.

By mid-June 2026, BlackRock's spot Bitcoin ETF (IBIT) had reached close to $49.5 billion in assets under management, and spot Bitcoin ETF assets for the entire United States had surpassed the $100 billion mark, highlighting growing institutional acceptance of the crypto asset globally.

Also Read: 10 Best Crypto Exchanges in India Right Now: Fees, Features, and FIU Status Compared

What’s Next?

Even though India has not been as open toward cryptocurrencies as it has been to equities or mutual funds, it has stopped considering crypto as an industry that should be banned. Rather, the market is now moving toward a compliance-based approach where exchanges are required to adhere to strict AML norms, register as FIUs and be subject to taxation.

For investors, this has become more crucial when selecting the platforms they can register at, as FIUs ensure proper tax compliance and avoid going to unregulated offshore platforms. The country seems to be progressing toward a crypto-friendly environment with increasing clarity.