India's Crypto Policy Fails to Address Decentralization Challenge

India's crypto policy has been designed to treat cryptocurrencies as traditional securities, imposing a 30% flat tax and mandatory Tax Deducted at Source (TDS) on virtual digital assets. This approach creates significant friction at the fiat-to-crypto gateway, making it difficult for users to access decentralized finance.

The shift to decentralized alternatives is becoming increasingly popular, with users moving to non-custodial wallets to avoid Know Your Customer (KYC) requirements. However, this shift bypasses current regulatory frameworks, creating a blind spot for authorities once assets enter the blockchain.