CoinDCX CEO Emphasizes Urgent Need for VDA Regulations Ahead of Budget

Sumit Gupta, CEO of CoinDCX, one of India’s largest cryptocurrency exchanges, has stressed the critical need for a regulatory framework for Virtual Digital Assets (VDAs) in his recent posts on X. With the Union Budget for 2025-26 approaching, Gupta points out significant issues such as high taxation and unclear regulations that are stifling innovation and hindering the growth of India’s crypto ecosystem.

He noted that the current framework imposes a hefty 30% capital gains tax and a 1% Tax Deducted at Source (TDS) on VDA transactions.

These challenges affect not only users but also the crypto businesses operating in India. Due to the heavy taxation, many users are shifting to offshore platforms. A recent report indicates that about 90% of VDA trading volume, valued at over $73.17 billion (approximately 600 crores INR), takes place on these platforms, which are outside India’s regulatory reach.

Gupta explained that while the existing regulations aim to enhance transparency and monitor VDA transactions, they severely hinder the growth of the crypto sector. High-frequency traders, essential for maintaining market liquidity, are migrating to foreign platforms, which poses a risk to the local ecosystem.

Founders, investors, and developers are hopeful that the upcoming budget will bring a policy shift that prioritizes innovation and development within the sector.

Key Expectations from Budget 2025

Gupta outlines several measures that could foster sector growth while ensuring compliance and consumer protection:

Rationalize the TDS Rate
Reducing the TDS from 1% to 0.01% would make Indian exchanges more competitive and encourage more traders to participate in the ecosystem, thereby enhancing tax compliance.
Growth-Friendly Tax Environment
A more balanced tax structure that imposes higher taxes on short-term gains while providing exemptions for long-term holdings would be beneficial.
Streamlined Regulatory Framework
Establishing a comprehensive regulatory framework similar to those in Singapore and Switzerland would align India’s policies with global best practices, attracting more investors and generating additional revenue for the sector.

Final Thoughts

As Budget 2025 approaches, its decisions will shape the future of the Indian crypto ecosystem. The government faces a choice: continue with strict policies that overlook the sector’s potential or adopt crypto-friendly regulations to compete in the global blockchain arena.Share