India’s crypto policy returned to the center of parliamentary debate after a nearly three-hour meeting on January 7, 2026, where the Parliamentary Standing Committee on Finance reviewed risks tied to Virtual Digital Assets, or VDAs. The panel, chaired by Bhartruhari Mahtab, heard briefings from the Financial Intelligence Unit-India and the Central Board of Direct Taxes on enforcement activity, policy options, and the current state of the market.
Third committee meeting keeps pressure on a formal legal framework
This was the committee’s third discussion focused on cryptocurrency, with more meetings expected. Mahtab said lawmakers examined the present condition of crypto in India and possible regulatory systems, while making clear that the conversation is still in its early formative stage. He also said countries are taking sharply different approaches to digital assets, ranging from outright bans to strict regulatory regimes, and indicated that regulation would be a better course for India than a complete prohibition.
CBDT says undisclosed VDA income reached Rs 888.82 crore
The tax authority used the meeting to outline what it has been finding in crypto-linked cases. According to the CBDT, money moved through VDAs by fraudulent means is being actively tracked, and authorities have detected cases in which income and assets were converted into cryptocurrencies and parked abroad.
The agency told the panel it had identified about Rs 888.82 crore in undisclosed income from VDA transactions. It also said notices and communications had been sent to more than 44,000 taxpayers connected to such cases. That places crypto transactions firmly within India’s tax enforcement net, with domestic and offshore activity both under scrutiny.
AML oversight expands as 49 exchanges register with FIU-IND
India’s anti-money laundering apparatus is already active in the sector even without a dedicated crypto law. As of January 2026, 49 crypto exchanges were registered with FIU-IND under the Prevention of Money Laundering Act, according to the material presented around the meeting. The structure remains fragmented, but it is not absent: tax enforcement and AML supervision are already operating in parallel.
Taxed but not fully regulated remains the core policy contradiction
One of the clearest points raised in the discussion was the tension inside India’s current approach. The Reserve Bank of India does not recognize cryptocurrency as legal tender, yet crypto trading is allowed and taxed. At present, gains from virtual currency are subject to a 30% flat tax, while each transaction carries a 1% TDS.
An opposition member of the committee later said this mixed position has created confusion for investors and businesses because crypto is neither banned nor governed by a single clear law. Trading is permitted. Taxation is in place. A full regulatory code is still missing.
User growth stays strong as industry seeks clearer rules
The source material said India had around 119 million crypto users in 2025, with adoption projected to pass 123 million by the end of 2026. Use remains especially visible among younger investors, users in smaller cities, and remittance-related activity. Market participants and industry voices argue that clearer rules could widen participation.
SB Seker, Binance’s head of APAC, said in an interview that India needs clearer regulatory rules. He said that could bring more institutional adoption and support domestic exchanges by reducing reliance on offshore platforms.
Global models are shaping the Indian debate
Lawmakers are also looking outward as they weigh next steps. The material cited the European Union’s MiCA framework for exchanges and stablecoins, the US push on stablecoin legislation through the GENIUS Act, Singapore and Hong Kong as regulated crypto hubs, the United Arab Emirates’ harmonized framework, and Brazil’s new VASP authorization regime set to begin in February 2026. China, by contrast, continues to maintain a strict ban while promoting its digital yuan.
At the same time, industry engagement is picking up. The Bharat Web3 Association met the Finance Ministry this week and presented its pre-Budget 2026 roadmap, focusing on TDS relief, loss set-offs, and access to banking services. For now, crypto in India remains legal, taxed, and closely watched, but still lacks a dedicated regulatory law.