“When you don’t have regulation, you don’t have certainty for businesses, and you don’t have certainty for consumers,” Bal said. She emphasised that regulation is necessary “to safeguard consumers but also tell businesses what the rules of engagement are.” Clear rules, she added, can help attract investment and innovation while preventing what she called “entrepreneurial flight,” which has increased since India’s punitive tax regime was introduced.
Bal pointed out that the 1% tax deducted at source (TDS) on crypto transactions and the 30% income tax on profits have led to a sharp drop in domestic trading volumes. “After the 1% TDS was introduced, exchange volumes fell by about 81%,” she said. However, the activity hasn’t stopped — it has simply moved offshore. “About ₹32,000 crore has moved from domestic exchanges to foreign ones,” she noted, as traders sought to avoid high taxes.
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She explained that the 1% TDS was originally meant to trace transactions, similar to a securities transaction tax, but its rate made trading “very expensive and non-remunerative.” A smaller rate, she argued, could achieve the same tracking objective without driving away capital. “Something better would be a 0.01%, which would still achieve the object sought but would not necessarily encourage capital flight,” Bal said.
Citing Esya Centre’s recent research, Bal said a survey of 1,000 Indian investors showed that while adoption of traditional financial instruments remains higher, knowledge and awareness play a key role in crypto adoption. Among educated, urban respondents, 39.2% invested in traditional financial instruments and 16% in crypto assets. But among those who understood both, adoption rose to 31% for crypto and 73% for financial instruments.
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First Published: Nov 13, 2025 2:54 PM IST
