India Signals Tougher Crypto Oversight Even As Binance Pushes For Regulated Web3 Expansion
India is moving toward tighter oversight of cryptocurrencies and virtual digital assets even as global exchange Binance urges policymakers to adopt a more innovation-friendly regulatory framework that could position the country as a major blockchain and Web3 hub.
Two documents reviewed by lawmakers and industry participants this week reveal sharply contrasting approaches shaping India's crypto debate. While a government background note prepared for Parliament describes the virtual digital asset ecosystem as “high risk” and linked to money laundering, terror financing and illicit cross-border activity, Binance's submission to the Parliamentary Standing Committee on Finance argues that regulation — rather than restrictive taxation or policy ambiguity — is the best path forward.
The government note, prepared by the Finance Ministry and Financial Intelligence Unit, highlights concerns over privacy coins, offshore exchanges, mixers and decentralized finance platforms, which authorities say create serious anti-money laundering and tax-enforcement risks. Officials said suspicious transaction reports linked to crypto surged to more than 20,000 in FY2025-26, compared with about 1,300 two years earlier.
The note also defends India's controversial crypto tax regime, including the 30% levy on gains and 1% transaction tax deducted at source, saying the measures are intended to discourage speculative activity and protect the tax base.
At the same time, Binance's 9-page submission presents India as one of the world's most important long-term crypto growth markets, citing the country's large Web3 developer ecosystem, rapid digital adoption and potential to generate more than 800,000 blockchain-related jobs by 2030.
The exchange argues that India currently suffers from regulatory fragmentation, with the Reserve Bank of India maintaining a cautious stance while other agencies gradually move toward supervised engagement.
Binance urged lawmakers to consider creating a bespoke crypto regulatory framework — or even a dedicated digital asset regulator similar to Dubai's VARA — instead of trying to fit cryptocurrencies into existing securities laws. The company also proposed reducing India's crypto transaction tax from 1% to 0.01% and aligning taxation of digital assets more closely with equities and mutual funds.
One of Binance's most ambitious recommendations involved creating an INR-backed stablecoin integrated with India Stack infrastructure such as Aadhaar, DigiLocker and UPI to support programmable payments and cross-border transactions.
The parallel discussions underscore India's increasingly nuanced approach toward crypto: resisting unrestricted adoption while acknowledging that digital assets and blockchain infrastructure are becoming too large to ignore.