India hasn’t banned crypto exchanges but forces them to register with the FIU while legal rules are still being developed.
The government taxes crypto trades with 1% TDS and flat profit tax even though it hasn’t written full laws for digital assets yet.
WazirX will soon restart fund distribution in India after its hack, avoiding any offshore shift and gaining regulatory alignment.
India’s crypto scene remains murky, with exchanges not officially banned or legalized, according to the Finance Ministry. While the country still lacks a specific legal framework for cryptocurrency, exchanges must register with the Financial Intelligence Unit (FIU). This rule applies to all exchanges, including international ones offering services to Indian users. Hence, these platforms now face compliance pressure without enjoying full legal recognition.
Finance Minister Pankaj Chaudhary confirmed the current gray area. He stated that virtual digital assets (VDAs) are not formally regulated in India. However, compliance obligations continue to grow. All Virtual Asset Service Providers (VASPs) must now follow guidelines under the Prevention of Money Laundering Act (PMLA). This gives authorities tools to monitor crypto for risks like terrorism financing and fraud.
Taxation Is Clear Despite Regulatory Uncertainty
Despite the lack of crypto regulations, India has implemented a strict tax regime for digital assets. The Finance Act of 2022 introduced Section 194S, enforcing a 1% Tax Deducted at Source (TDS) on crypto transactions involving taxable gains. Besides, Section 115BBH adds a flat tax rate on profits from crypto trades. Consequently, even as legal rules evolve slowly, tax enforcement remains robust.
Additionally, the Reserve Bank of India (RBI) issued public warnings. It often highlights crypto’s financial risks, volatility, and regulatory uncertainty. However, these advisories stop short of banning platforms directly. Authorities appear more focused on tracking compliance and collecting tax revenue than enforcing harsh crackdowns.
WazirX Prepares to Restart After Cyberattack Setback
Meanwhile, WazirX is working to restart operations after a $235 million hack. The Indian exchange completed a restructuring process in Singapore and gained 91% creditor approval. Now, it plans a final revote to confirm minor changes in the distribution scheme.
The fund distribution will start soon, handled by Zanmai India, a registered FIU entity. WazirX co-founder Nischal Shetty confirmed that no Panama shift is needed. He emphasized that the revised plan strengthens regulatory alignment within India.
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