Union Budget 2026: Crypto industry for balanced regulatory environment

Bengaluru: Earlier this month, Financial Intelligence Unit (FIU) - India tightened its compliance norms and released the updated AML (Anti-Money Laundering) & CFT (Countering the Financing of Terrorism) Guidelines for entities providing services related to Virtual Digital Assets (VDAs) such as cryptocurrency. Though it is seen as a significant step, the VDA sector expects more clarity in rules and seeks a balanced regulatory environment in the upcoming Budget 2026.

CoinDCX Co-Founder Sumit Gupta says the VDA sector is naturally looking for measured relief, especially since it has been four years since the current taxation framework was introduced.

In the 2022 Budget, Union Finance Minister Nirmala Sitharaman announced an additional 1% TDS on payment made for the transfer of VDAs. Also, in case of gifts in the form of virtual assets, the same will be taxed in the hands of the recipient. She also announced a 30% tax on any income from the transfer of any VDA, which includes cryptocurrencies to non-fungible tokens (NFTs). Since then, there was no significant announcement for the cryptocurrency industry in the subsequent budgets.

"The decisions taken now can meaningfully accelerate innovation and help India emerge as a global Web3 & VDA leader. The way forward lies in pragmatic reforms that bring users back to compliant platforms while strengthening compliance. A critical first step is ensuring clarity in rules and mandating that all crypto exchanges uniformly implement TDS provisions, which will improve compliance and enhance citizen protection against questionable, non-compliant operators through improved adherence to regulations," Gupta says.

Also, the crypto industry has been demanding to reduce TDS from 1% to 0.01% as the current rate leading many investors and traders to turn towards foreign exchanges.

"Reducing TDS from 1% to 0.01% would retain monitoring, while removing the primary incentive for offshore migration, encouraging users to return to Indian platforms and restoring transaction visibility under government oversight. Aligning the 30% capital gains tax with income tax slabs, along with allowing loss offsetting and standard business deductions for Web3 ventures, would help create a stable, transparent, and future-ready ecosystem that supports responsible innovation in India," he adds.

Binance Head of APAC SB Seker says the forthcoming Budget presents an opportunity to strengthen the VDA ecosystem through measured regulatory and tax refinements that protect users, maintain financial stability, and support responsible market development.

"From a tax perspective, a pragmatic framework focused on capital gains realised, with provisions for limited loss setoff and removal on transaction-level levies in favour of net-revenue generating corporate taxes instead, can improve fairness for retail participants and indicate to them that India has moved past the tax-and-deter regime towards a fuller license-and-supervise one. Clear, consistent operating standards for VDA platforms, aligned with India’s AML/KYC and investor protection priorities, will encourage responsible capital investment, create skilled jobs, and build domestic capabilities," Seker adds.

Recent estimates suggest that Indians contributed close to Rs 5 lakh crore in trade volume on offshore exchanges between October 2024 and October 2025, highlighting how quickly trading activity and value can migrate outside the country, Delta Exchange CEO and Co-Founder Pankaj Balani says.

He adds that when platforms sit beyond Indian jurisdiction, oversight weakens, consumer grievance redressal becomes limited, and the economic value created by Indian users disproportionately flows overseas. "We lose the jobs that this industry creates and the economic value it creates. More importantly, relying on non-accountable foreign platforms for critical financial infrastructure introduces systemic risk, especially during periods of geopolitical or market stress," Balani says, adding that in this Budget, they hope to see a balanced regulatory framework that enables responsible innovation while firmly enforcing compliance.

"That means acting decisively against entities offering unauthorised services, and clearly differentiating between compliant Indian platforms and non-compliant offshore operators through policy support and fair, growth-oriented incentives for domestic players... If India can build and retain its own digital asset champions, we will not only strengthen consumer protection and tax compliance, but also ensure that the next phase of financial innovation is built in India, for India," he concludes.