Key Highlights
- MP Raghav Chadha proposes to regulate crypto assets and tamper-proof Land Registry Ledger
- Over ₹4.8 lakh crore in trade and 73% of India’s crypto trading volume for FY 2025 have shifted to offshore
- Despite a 30% flat income tax and 1% TDS, the absence of an “asset class” status leaves 12 crore Indian investors without consumer protection
Speaking during the Rajya Sabha session, Aam Aadmi Party (AAP) MP Raghav Chadha raised a critical alarm regarding India’s stance on Virtual Digital Assets (VDAs). He urged the government to legalize crypto assets as a new asset class.
Chadha pointed out a glaring systemic paradox: while the government aggressively collects a 30% flat tax on profits and a 1% Transaction Tax (TDS), it refuses to grant these assets a formal legal classification.
“We currently tax these assets as if they are legal, but we regulate them as if they are illegal,” Chadha remarked, noting that this “half-way” approach is the primary driver behind a massive drain of domestic wealth and talent.
The push for onshore regulation
The impact is threefold. Primarily, 12 crore Indian investors are currently forced to use offshore platforms to trade in crypto, stablecoins, and Real-World Assets (RWA), leaving them vulnerable.
One hundred and eighty VDA startups have migrated their operations to crypto-friendly hubs. Finally, the Indian Government is losing out on significant revenue that could be captured through a more comprehensive regulatory net.
Chadha’s suggestion to the government is the formal legalization of VDAs as an asset class. This would involve creating a dedicated licensing law, establishing clear consumer and investor protection mandates, and implementing robust anti-money laundering (AML) guidelines specifically tailored for digital assets.
Due to the lack of an onshore regulatory “ring-fence,” Indian capital is flowing into Dubai, Singapore, and Malaysia. These jurisdictions have provided the “explicit legal classification” that India currently lacks, attracting Indian investors and entrepreneurs alike.
They have successfully attracted billions in investment by creating dedicated regulators—such as Dubai’s Virtual Asset Regulatory Authority (VARA)—and providing tax incentives for long-term equity and digital asset holdings.
73% of India’s crypto trading volume moved offshore
The MP highlighted that in Financial Year 2025, a staggering 73% of India’s crypto trading volume moved to offshore exchanges. This trend is accelerating as the industry seeks the stability of a formal legal framework.
The MP argues that “prohibition is not protection; regulation is protection.” Without an official asset class status, there are no “rules of the road,” making the ecosystem a “Wild West” for retail investors. By bringing these assets “onshore,” the government can ensure compliance, mitigate money laundering risks, and foster domestic innovation.
By heavily regulating and “ring-fencing” the ecosystem, the government can turn a grey market into a transparent, tax-compliant sector. Chadha estimated that this move would result in ₹15,000 to ₹20,000 crore in additional tax revenue being deposited into the government treasury, while simultaneously protecting the interests of the middle-class investor.
Chadha concluded his intervention by urging the government to recognize the reality of the digital economy. Rather than allowing ₹4.8 lakh crore to circulate outside India’s borders, he suggested that a bespoke legislative framework would transform India into a global hub for blockchain and virtual assets, ensuring that both the investors and the exchequer are protected.
Modernizing India’s real estate infrastructure
Beyond the regulation of cryptocurrencies, Chadha has also proposed the creation of a Blockchain-based Land Registry Ledger. This proposal addresses property disputes and fraudulent land titles.
By migrating physical records to a decentralized blockchain, the government could create a “digital record book” that is inherently resistant to retroactive tampering or unauthorized alteration. The MP proposed starting this digital transition with 10 major and Tier-2 cities to establish a proof of concept. Under this system, every transaction—whether it is a sale, a mutation of records, or a legal inheritance—is recorded on the blockchain.
The global contrast: Regulation vs. stagnation
While India grapples with these proposals, the global landscape illustrates the cost of delay. In jurisdictions like Singapore and Dubai, the integration of blockchain into governance and finance is already well underway.
Singapore’s “Project Guardian” explores the tokenization of assets, while Dubai’s VARA provides a “bespoke” legal framework that gives businesses 100% clarity. In contrast, India’s current policy focuses heavily on taxation (30% gains tax and 1% TDS) without providing the legal “asset class” status that Chadha argues is necessary to prevent a capital drain.
By maintaining a high tax burden and a lack of regulatory certainty, India risks losing its fintech edge. By classifying digital tokens as capital assets with indexation benefits—similar to traditional real estate—the government could encourage long-term holding and wealth creation rather than penalizing it.
Also Read: Miss a Crypto Tax Filing? India’s Budget 2026 Introduces Daily Penalties
