PANews reported on August 22 that according to Cointelegraph, India's cryptocurrency landscape is about to change, and the country's regulatory future is hanging in the balance as the Department of Economic Affairs (DEA) prepares to release a key consultation document. Local media reported that the document is expected to be released in September or October this year and will solicit feedback from various stakeholders, indicating that the government is playing an active role in shaping the direction of India's digital currency.

The DEA’s upcoming document is expected to address broader concerns surrounding the regulation of crypto assets, including issues raised by the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI). In May, the Securities and Exchange Board of India (SEBI) proposed a multi-regulatory approach, where different aspects of cryptocurrency trading will be regulated by different financial authorities. This fragmented approach highlights the complexity of regulating technologies that cross the boundaries of traditional finance and pose unique challenges. On the other hand, the Reserve Bank of India has been warning about the macroeconomic risks posed by digital currencies. The central bank’s stance reflects its deep concerns about the potential impact of cryptocurrencies on India’s economic stability. This caution is reflected in the government’s recent actions against offshore crypto platforms and virtual digital asset (VDA) service providers, including a high-profile ban on Binance.

India has already implemented a strict tax system for cryptocurrency transactions and is cautious about full regulation. The 30% tax on unrealized cryptocurrency gains and 1% withholding tax (TDS) implemented in April 2022 marked the first major move by the government to impose a degree of control over the market. However, despite these measures, the Indian government has not regulated the buying and selling of cryptocurrencies, but has focused on curbing crypto-related money laundering and terrorist financing.