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India has officially decided against implementing a full-scale regulatory framework for cryptocurrencies, citing concerns over systemic financial risks and the potential for destabilization. The Reserve Bank of India (RBI) and the Ministry of Finance jointly concluded that legitimizing digital assets through formal regulation could undermine monetary sovereignty and complicate enforcement of existing tax laws.

Instead of embracing a comprehensive approach, India will continue its current strategy of partial oversight. This includes a 30% capital gains tax on crypto transactions and a 1% tax deducted at source (TDS) on trades, which has significantly reduced trading volumes on domestic exchanges. Peer-to-peer transfers and decentralized finance platforms remain largely unregulated, creating a fragmented landscape for investors and developers.

Officials argue that the lack of global consensus on crypto regulation makes unilateral action risky. “We must prioritize financial stability over innovation,” said a senior official from the RBI. The decision has sparked debate among industry leaders, many of whom argue that India risks falling behind in blockchain development and fintech competitiveness.

Despite the regulatory chill, crypto adoption continues to grow among retail users, especially in tier-two cities. Analysts expect India to revisit its stance once international frameworks—such as those proposed by the G20—gain traction.