A decade ago, digital payments in India felt like a clever hack. Today, UPI is muscle memory. Crypto is at a similar inflection and it is no longer a fringe curiosity, but a parallel rail for value movement that many Indians already use for trading, long-term allocation, and participation in global digital markets. As the Union Budget 2026 arrives on February 1, 2026, the question is not whether crypto exists in India. It does. The question is whether policy design makes compliance easier than circumvention.
Huge Adoption
The adoption signal is hard to miss. Chainalysis has repeatedly placed India at the top of its global adoption index. This reflects broad usage across both centralised and decentralised services.
Reuters reported in 2024 that India led global adoption for a second straight year despite a tough policy stance. That paradox is instructive and it says thus: participation is real, but friction can redirect activity away from domestic supervision and into channels where dispute resolution, fraud controls, and accountability are weaker.
Three Practical Gaps
Budget 2026 can address three practical gaps. First, keep reporting intact, but reduce frictions that weaken market quality. The 1 per cent TDS on transfers (Section 194S) was introduced as a traceability measure. In practice, it behaves like a repeated cash-flow haircut for active users and liquidity providers. It drains order books.
Official data tabled in Parliament shows the pipeline is meaningful. The total TDS collected on VDA transfers was Rs.221.27 crore in FY 2022-23; Rs.362.70 crore in FY 2023-24, and Rs.511.83 crore in FY 2024-25. The policy goal should be to preserve reporting while restoring depth. For example, recalibrate TDS to a lower rate that still leaves a reporting trail. Also, a lower TDS would bring more people into the tax pool and the government can draw from a larger tax base.
Consumer Focus
Second, treat consumer protection and enforcement capacity as economic infrastructure. Parliament has disclosed that survey actions against three crypto exchanges detected TDS non-compliance of about Rs.39.8 crore and undisclosed income of about Rs.125.79 crore. Parliament data, as reported by the media, says wider actions across entities detected undisclosed income linked to VDA transactions of Rs.888.82 crore. These numbers are not a reason to retreat from the sector; they are a reason to strengthen the pipes. Budget 2026 can back standardised compliance expectations for crypto exchanges. There should be allocations for strong KYC and AML, clearer audit norms, and better resourcing for cyber and financial-crime response in the Budget.
Third, create a clear, India-specific pathway to lead. India does not need to choose between innovation and risk management. What it needs is clarity. A coherent licensing and supervision architecture for virtual asset service providers, aligned with FATF standards and consistent across agencies, would reduce uncertainty for customers and banks. This can coexist with the RBI’s risk concerns if the rules are explicit. In addition, there should be segregation of customer assets, transparent disclosures, Travel Rule readiness, and credible market surveillance. If we pair that with targeted support for real-economy pilots and talent in security and compliance tooling, India can be the hub of global Web3 capability.
For every Indian customer, the crypto pre-budget advice can be this: use regulated, FIU-registered platforms. Keep clean records. Treat crypto like any high-risk asset. Prudent investors should size positions conservatively, avoid leverage if they are not experts, and never chase WhatsApp tips. If Budget 2026 makes compliance simpler than circumvention, India will not only be a major participant in the digital economy but also be the nation that writes its rules.
(The author is the CEO of Giottus)
Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd. Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.
