Why India Can’t Decide Whether to Love or Loathe Crypto in 2025

Ah, India – a country known for its deep philosophical musings and a flair for caution. And when it comes to cryptocurrencies, it’s no different. Instead of charging ahead with a full-fledged legal framework (because, obviously, who needs clarity?), India is taking the ‘let’s watch and see’ approach. A rather charmingly indecisive tactic, don’t you think? According to a recent government document, India is opting for partial oversight. The reasoning? Well, heaven forbid crypto gets “legitimized” and becomes a proper part of the financial system – that would just be asking for trouble, wouldn’t it? Financial instability, systemic risks… oh my!

The Reserve Bank of India (RBI) has weighed in with its typically dry charm, suggesting that regulating crypto effectively is nearly as impossible as keeping a soufflé from collapsing. Sure, a ban might reduce the drama, but it wouldn’t stop people from trading it peer-to-peer or on decentralized platforms. And where’s the fun in that?

Why India Hesitates

The plot thickens – the document seen by Reuters reveals that the government’s hesitation is rooted in the fear that any regulation would “grant legitimacy.” And once that happens, who knows what could happen next? Crypto might just worm its way deeper into the economy, threatening all the neat and tidy financial systems they hold so dear. Naturally, most crypto assets are speculative – because who doesn’t love a good gamble? – so this is all a bit like handing a toddler a sharp knife and hoping for the best.

But then again, a complete ban is hardly a solution. People can still trade directly or use decentralized exchanges. So, India’s government is caught between a rock and a hard place, opting for a middle ground that’s as satisfying as a soggy biscuit.

The Global Context

Now, let’s take a quick peek at the rest of the world, shall we? The U.S., ever the overachiever, has decided to legalize the use of stablecoins, with President Trump – yes, you heard that right – signing the GENIUS Act in 2025. Meanwhile, China is still in its “crypto? Never heard of it” phase, though it is toying with the idea of a state-backed stablecoin. Japan and Australia are also dipping their toes into the regulatory waters without throwing the entire pool party. But India? India decided to sit out for a while, watching the U.S. from the sidelines, waiting for the perfect moment to jump in. Or maybe not. Who knows?

Stablecoins Under the Scanner

And then, of course, there are stablecoins – the stable (but still kind of unpredictable) little darlings of the crypto world. Most stablecoins are pegged to the U.S. dollar, and India’s government is not amused. The fear is that stablecoins could wreak havoc on India’s beloved digital payment system, the Unified Payments Interface (UPI). And who can blame them? After all, stablecoins may be ‘stable,’ but we all know that even the most stable of things can end up with a serious liquidity crisis when you least expect it. A few shocks to the market and suddenly, everyone’s in a panic. What fun!

Where Things Stand

At present, global crypto exchanges can operate in India, provided they’re registered with the authorities and comply with anti-money laundering regulations. However, the taxes on crypto profits are so high that most traders are less interested in crypto and more interested in taking a long nap. Despite the fact that Indians are holding a cool $4.5 billion in crypto, the government assures us that the sector is still not big enough to upset the apple cart. Or should we say, the rupee cart?

For now, it looks like India is content to keep crypto at arm’s length – neither fully embracing it nor giving it the cold shoulder. A delightful little dance, don’t you think?

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FAQs

Is cryptocurrency legal in India?

Well, it’s not exactly legal. India’s decided on partial oversight, which allows registered exchanges to operate but with a lovely dose of heavy taxation.

Why won’t India fully regulate crypto?

Ah, because the government is worried it would make crypto respectable. We can’t have that! If it’s regulated, it might actually become part of the financial system, and we wouldn’t want that, now would we?

How does India’s approach compare to other countries?

India is playing it safe, thank you very much. While the U.S. is embracing stablecoins, India is still busy deciding whether or not it’s ready for the commitment.

2025-09-10 17:16