technology, which ensures transparency but also allows anonymity. This mix of innovation and risk has made lawmakers cautious.
In 2018, the RBI banned banks from dealing with crypto exchanges and traders. This move almost killed India’s crypto market overnight. However, in a landmark judgment in Internet and Mobile Association of India v. Reserve Bank of India (2020), the Supreme Court struck down the ban, ruling that it was disproportionate and violated the right to trade under Article 19(1)(g) of the Constitution. The court observed that while the RBI has powers to regulate, a blanket prohibition was not justified when no specific law declared crypto trading illegal. This decision revived the industry but also exposed the urgent need for a proper legal framework.

Since then, the Indian government has taken a cautious approach. It has not banned cryptocurrencies, but it has also not recognized them as legal tender. In 2022, the Union Budget introduced a 30% tax on profits from virtual digital assets (VDAs) and a 1% TDS (Tax Deducted at Source) on crypto transactions. While this move gave some legitimacy to crypto assets, it also made trading less attractive, especially for small investors. Many experts argue that taxing something heavily without regulating it properly creates confusion and drives users to unregulated or foreign platforms.

The biggest legal challenge is the absence of a dedicated Cryptocurrency Regulation Bill. The government has repeatedly stated that it is working on a framework, possibly in line with international standards. However, with global concerns over money laundering, terror financing, and frauds, India’s regulators are walking a tightrope between encouraging innovation and ensuring financial stability.

Courts in India have increasingly become important in shaping the legal narrative around crypto. Apart from the 2020 Supreme Court verdict, various High Courts have heard petitions seeking clarity on whether crypto trading should be banned, regulated, or taxed differently. So far, the judiciary has mostly taken a balanced view — stressing the need for regulation but avoiding judicial overreach in an evolving area of technology and finance.

Globally, countries are moving towards clearer rules. The European Union has already introduced the Markets in Crypto-Assets (MiCA) regulation, while the United States is debating multiple bills to define and control digital assets. India cannot afford to lag behind. Without proper laws, investors remain vulnerable to scams, and the state loses potential tax revenue from a growing sector.

It is time for India to adopt a comprehensive crypto law that defines digital assets, lays out licensing norms for exchanges, ensures investor protection, and coordinates with global anti money laundering standards. The law must also make taxation fair and transparent, balancing the need for revenue with the goal of innovation.

Cryptocurrencies represent both opportunity and risk. They can transform financial systems, promote inclusion, and attract global investment — but only if handled wisely. India’s legal and judicial journey with crypto must now move from uncertainty to stability, creating a system that protects the investor without stifling technological progress.