CoinSwitch and Trilegal Team Up To Address India’s VDA Policy Deadlock

In a market that has spent years navigating a maze of heavy taxation and legal ambiguity, the conversation around Virtual Digital Assets (VDAs) in India is undergoing a fundamental shift. 

Ashish Singhal, Co-Founder of CoinSwitch, announced the publication of “Block by Block,” a comprehensive research compendium that provides a data-driven roadmap for the nation’s crypto future.

Produced in a unique tripartite collaboration with leading law firm Trilegal and the National University of Juridical Sciences (NUJS) Law Review Kolkata, the compendium is the culmination of a national initiative to engage India’s brightest legal minds in solving the “crypto conundrum.”

The initiative was led by CoinSwitch, India’s largest crypto trading platform, alongside Jaideep Reddy (Partner at Trilegal) and Dr. Shameek Sen (Professor at NUJS Kolkata).

They convened a jury to select the top five research papers from law and public policy students across India, ensuring the proposals were grounded in “structured thinking” rather than just industry sentiment. Despite having over 20 million crypto users, the nation still lacks a formal VDA (Virtual Digital Asset) Act.

Ending the ‘one-size-fits-all’ era

“If India wants durable regulation, it needs structured thinking,” Singhal noted. The “Block by Block” report argues that it must move away from a “one-size-fits-all” approach.

The compendium moves beyond general advocacy, offering granular solutions to the five biggest “pain points” in the Indian ecosystem. It outlines specific strategies for taxation, classification, compliance, consumer protection, and innovation.

1. Functional classification: Moving away from treating all “crypto” as the same. The papers suggest a tiered system where stablecoins, NFTs, and utility tokens are governed by different rules based on their risk profile.
2. Harmonizing tax policy: While the 2025 Budget introduced mandatory reporting, “Block by Block” explores how to align these requirements with the existing 30% tax to ensure users aren’t driven to offshore, unregulated exchanges.
3. Compliance: Creating a friction-free Know Your Customer (KYC) and Anti-Money Laundering (AML) framework.
4. Consumer protection: The report proposes a “Disclosure First” mandate, requiring exchanges to provide standardized risk warnings and proof-of-reserve audits to protect retail investors.
5. Innovation: Ensuring regulations don’t stifle the underlying blockchain technology.

It essentially provides the Ministry of Finance and the Reserve Bank of India (RBI) with a peer-reviewed “plug-and-play” policy framework.

Solving the ‘offshore migration’ crisis

While the report was launched digitally and shared across policy circles in New Delhi, its primary impact is aimed at the 20 million+ Indian crypto users. Currently, many of these users have migrated to offshore exchanges to avoid the domestic 1% TDS and 30% flat tax. This report seeks to create a “level playing field” that would encourage them to return to the regulated Indian ecosystem.

The “Block by Block” research proposes a “Compliance-First” tax model. By allowing the offsetting of losses and reducing the TDS to a manageable level, the government can bring users back to domestic exchanges where PMLA (Prevention of Money Laundering Act) and KYC (Know Your Customer) norms are strictly enforced.

The sandbox solution

The timing is critical. As of February 2026, the G20 Roadmap on Crypto Assets (initiated during India’s presidency) is being localized by various jurisdictions. With the Indian government leaning toward “partial oversight” rather than full-scale legislation to avoid systemic risk, “Block by Block” offers a middle ground: Regulatory Sandboxes.

Instead of the “regulate first, ask questions later” approach, the compendium suggests a safe harbor for developers to test decentralized finance (DeFi) protocols and tokenization models. This allows the RBI and Securities and Exchange Board of India (SEBI) to observe market behavior in real-time, gathering the data necessary to write “durable” laws that don’t become obsolete within a year.

Ashish Singhal noted that “policy conversations need more depth.” For too long, the debate has been binary: “ban vs. legal tender.” This report fills the “intellectual gap” between those two extremes, focusing on how to protect users while allowing the asset class to grow—a balance that has eluded regulators since the 2022 tax implementation.

The compendium suggests a functional classification of assets. For example, a “utility token” used for a decentralized application should not be taxed or regulated in the same way as a “payment token” or a speculative investment. By refining these definitions, the report shows how India can implement the Prevention of Money Laundering Act (PMLA) and Foreign Exchange Management Act (FEMA) guidelines without stifling the Web3 startup culture that is currently fleeing to Dubai and Singapore.

The path to institutional legitimacy

For the retail investor, this news is the first sign of a “Safety Net.” The report advocates for mandatory Proof of Reserves and standardized risk disclosures, ensuring that the “FTX-style” disasters of the past are not repeated on Indian soil.

For the government, it offers a way to claim global leadership in the G20 crypto roadmap. By adopting a research-led framework, India can transform from a “market of participants” into a “hub of policy,” setting the standard for the Global South.

This move signals that the Indian crypto industry has matured. Instead of asking for permission, leaders like Singhal are providing the blueprints for governance. If the government adopts even a fraction of these research-backed suggestions, the impact will be twofold:

1. Institutional entry: Clearer classification will allow Indian mutual funds and institutional players to finally explore VDA-linked products.
2. Safety first: Retail investors will gain a “Regulatory Recourse,” something that has been missing during previous market crashes and exchange hacks.

By bridging the gap between industry, academia, and government, “Block by Block” may very well be the foundation upon which India’s digital economy is built—one research paper at a time.

For years, the Indian crypto industry has operated in a “gray zone” of uncertainty. This report represents a shift in strategy by major exchanges like CoinSwitch—moving away from simple advocacy toward providing the government with a ready-to-use legal blueprint. It signals that the industry is ready to self-regulate and collaborate on complex issues like consumer safety.

Also Read: INR 100 Crore Crypto Scam Ends with Arrest by Ahmedabad Police

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