CYPTOCURRENCY
REGULATIONS IN INDIA. CHALLENGES AND FUTURE PROSPECTS
BY FINANCE A : GROUP 1
.
Introduction
India's regulatory environment surrounding cryptocurrency has
witnessed significant changes, driven by shifting policies and
institutional responses
In 2018, the RBI implemented a ban that restricted banks from
enabling crypto transactions, severely impacting exchanges and
investor engagement
However, this ban faced a significant reversal in 2020 when the
Supreme Court deemed it unjustified due to a lack of substantial
evidence, paving the way for a revitalization of India's
cryptocurrency market.
Despite the burgeoning interest in cryptocurrency, the Indian
government introduced the Cryptocurrency and Regulation of Official
Digital Currency Bill in 2021.
Background
Decentralization & Security
Cryptocurrencies (e.g., Bitcoin, Ethereum) operate without a central
authority. Blockchain ensures secure & immutable transactions
using cryptographic algorithms.
Financial Revolution
Offers an alternative to traditional banking. Enhances financial
inclusion for the unbanked population.
Beyond Finance: Blockchain Innovation
Applied in finance, healthcare, and supply chain management.
Drives efficiency, transparency, and security.
Literature Review
Region Regulatory Approach Taxation Policies Key Legal Restrictions
Agency-driven, litigation- SEC/CFTC oversight; strict
U.S. 30% capital gains tax
focused AML/KYC
Licensed exchanges;
EU Unified MiCA framework 0%–48% (varies by country)
stablecoin reserve rules
Up to 55% as miscellaneous AML compliance for large
Japan Progressive, FSA-regulated
income transactions
Criminalizes trading, mining,
China Total ban N/A (crypto illegal)
and exchanges
Importance of Regulations in
India
Financial Security & Stability
Prevents misuse in money laundering & terrorism financing.
Enforces AML (Anti-Money Laundering) & CFT (Countering the
Financing of Terrorism) laws.
Investor Protection
Reduces risks from market volatility & lack of transparency.
Implements KYC (Know Your Customer) policies to prevent scams &
fraud.
Fraud Prevention
Helps combat cybercrimes like ransomware & fraudulent
investment schemes. Strengthens security measures in the crypto
space.
Economic Growth & Innovation
Encourages fair regulations to attract global investments. Promotes
blockchain technology adoption, enhancing India’s financial sector.
Regulatory Challenges
KYC & AML Enforcement
Pseudonymity of transactions makes identity verification difficult. Lack of a universal
KYC/AML protocol complicates compliance.
Tax Compliance Issues
Tracking crypto holdings is difficult due to decentralized nature. Risk of tax evasion &
revenue losses for governments.
Financial Crimes & Fraud Risks
Anonymity can be exploited for money laundering & terrorist financing. Need for
effective detection tools while maintaining privacy.
International Coordination Gaps
No global consensus on crypto regulations. Cross-border enforcement remains a
complex challenge.
Rapid Technological Evolution
New blockchain innovations require adaptive regulatory frameworks. Maintaining
oversight while supporting innovation is essential.
Indian Cryptocurrency Market Growth 2024-2033
The Future: India’s Potential as a
Cryptocurrency Hub
Tech-Savvy Youth & Digital Economy
Large, young population embracing digital financial solutions.
Rapid adoption of blockchain and cryptocurrency technologies.
Growing Institutional & User Adoption
Increasing interest from fintech startups & global firms.
Expanding crypto usage beyond urban centers.
Regulatory Evolution: A Critical Need
Clear and supportive regulations essential for sustainable growth.
Balancing innovation with security to mitigate risks.
Future Outlook
Strong regulatory framework can position India as a global leader.
RBI and government bodies play a key role in ensuring stability &
innovation.
Thank you
Group 1, Finance A
