India Classifies Virtual Digital Assets as 'High-Risk' Amid Crypto Regulatory Focus

The Indian government has taken a tougher stance on virtual digital assets (VDA), classifying them as a 'high-risk' sector due to concerns over money laundering, trafficking, radicalisation, and suspicious crypto transactions.

A parliamentary panel met with senior government officials and representatives from exchanges such as Binance, WazirX, and ZebPay to discuss taxation, compliance, and the future framework for VDAs. The exchanges sought regulatory clarity and rationalization of crypto taxes, highlighting concerns over capital outflows and the lack of a level playing field with global players operating in India.

The government is studying global crypto regulation models, including approaches taken by countries such as the US, UK, and European Union, which have introduced regulatory frameworks for VDAs. In contrast, China has imposed outright bans on cryptocurrencies, while Japan and Brazil are attempting to govern VDAs through existing laws.