Legalise cryptocurrency and stablecoins in India, don’t drive investments offshore: Raghav Chadha

Rajya Sabha MP Raghav Chadha has urged the government to legalise virtual digital assets (VDAs) such as cryptocurrency and stablecoins, highlighting that the absence of a clear regulatory framework is pushing Indian investors and crypto companies to shift operations offshore.

“India taxes VDAs (virtual digital assets) like they are legal. But regulate it like they are illegal,” the Aam Aadmi Party MP said during the Budget discussion in the Upper House of Parliament on 9 February.

He further added that while the government taxes crypto at 30% capital gains rate and levies 1% TDS on transactions, it offers no legal recognition, no investor protection, and no dedicated anti-money laundering (AML) framework.

All profits from trading or selling crypto in India are taxed, which applies no matter how long an investor has held the asset. This means every time an individual makes a profit from crypto, they are legally bound to pay the crypto taxes that India imposes.

Chadha raps lack of regulation

Highlighting the cost of regulatory uncertainty, Chadha said around 12 crore Indians are now using overseas platforms for crypto trading, with ₹4.8 lakh crore in VDA having moved offshore.

He further added that 73% of India's crypto trading volume has shifted to foreign exchange, and nearly 180 Indian crypto startups have relocated abroad, to regions such as Dubai, Singapore and Malaysia.

“The answer is: compliance in India. Give VDAs a clear asset class status in India,” Chadha asserted during his speech.

According to Chadha, introducing a clear domestic regulatory sandbox with strong AML guardrails would encourage VDA activity to return to India, improve compliance, safeguard investors, and potentially boost annual tax revenue by ₹15,000–20,000 crore.

“Let us not fear innovation, let us regulate it. Prohibition is not protection, Regulation is protection,” he said.

What crypto exchanges say

Responding to Chadha's remarks, Nischal Shetty, the founder of crypto exchange WazirX, said, “India has safeguards in place for the virtual digital asset ecosystem with the FIU (Financial Intelligence Unit) overseeing compliance in operations and user protection in the last few years."

He added that to boost compliance, the government must address issues such as a ban on loss set-offs, high trading taxes and 1% TDS regime, which are pushing investors offshore and reducing tax collections linked to transaction flow monitoring. According to Shetty, these issues have been part of the FIU’s larger compliance efforts.

“While strengthening customer protection has been a priority for the government, the move has not served the purpose optimally because it has led investors to externalise risk by moving activity outside India’s jurisdictional safeguards, while the country loses hundreds of crores of taxes,” he said.

Meanwhile, Binance's APAC head SB Seker said countries across the world are increasingly setting clear rules for digital assets that encourage innovation while ensuring strong compliance, helping them emerge as global crypto hubs.

“As India emerges as a key growth engine of the Global South, the opportunity lies in shaping guardrails that protect consumers, retain talent, and enhance value creation. Continued dialogue and cooperation between policymakers and the industry remain essential to achieving these goals while ensuring a secure and transparent market environment,” he said.