Every technological evolution starts its journey as a minor inconvenience. The internet once seemed disorderly, digital payments untrustworthy, and mobile banking an extravagance limited to urban populations. Over time, clear policy and public confidence transformed these into widespread, everyday utilities.
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Crypto and Web3 now find themselves at a comparable juncture in India. They do not pose a challenge to the existing financial system, but rather represent a young, dynamic layer of digital infrastructure striving for cohesion. India has a proven track record that scale and robust safeguards can coexist effectively. Platforms like UPI, Aadhaar, and DigiLocker succeeded not because they were entirely risk-free, but because they were thoughtfully designed with essential oversight, powerful incentives, and significant adaptability. Crypto and blockchain technologies, too, require this precise balance to thrive.
The nation has already taken a crucial initial step by formally acknowledging virtual digital assets within the existing tax framework. This official recognition matters profoundly. It signals legitimacy, compels activity into transparent operation, and firmly establishes a framework for accountability. However, recognition on its own is insufficient. The current regulatory structure leans heavily towards caution, which leaves market participation fragmented and stifles genuine innovation, keeping it tentative.
One primary reason for this lingering hesitation is that crypto is often perceived narrowly, exclusively as trading or speculation. This limited view obscures the much larger potential picture. Web3 is about far more than just price movements; it fundamentally concerns programmable value, verifiable digital records, and decentralised trust mechanisms. Globally, blockchain is being actively tested and implemented in diverse applications: comprehensive supply-chain audits, efficient cross-border settlements, innovative digital identity layers, and the tokenisation of real-world physical assets. Seen in this broader light, crypto is less of a pure gamble and more of a foundational building block that effectively complements the existing, established financial systems.
The upcoming Budget 2026 presents a significant opportunity to strategically shift the policy conversation in this more constructive direction. The core policy question is no longer a binary debate about whether crypto should be allowed to exist, but rather how India can meaningfully and actively participate in an ongoing, undeniable global technological shift. A carefully calibrated approach that successfully reduces friction, clarifies ambiguous definitions, and aligns crypto taxation principles more closely with familiar capital-market rules would effectively encourage serious, valuable, and long-term engagement from legitimate participants.
It is also important to recognise a crucial fact: India already regulates this space more comprehensively than is frequently acknowledged in public discourse. Established crypto exchanges currently operate under strict anti-money-laundering norms (AML), mandatory reporting requirements, and direct oversight from financial intelligence units. The real challenge, therefore, is not a total absence of regulation, but rather an over-reliance on a punitive taxation structure as a simplistic policy substitute.
There is another critical dimension that truly deserves immediate attention: talent retention and capital flow. Talented Indian developers, visionary founders, and diligent compliance professionals are already deeply embedded within the global Web3 ecosystem. Many passionately continue to build for the vast Indian user base, yet are forced to strategically structure their primary ventures abroad to effectively navigate the profound regulatory uncertainty back home. This behaviour is not a flight of loyalty; it is a perfectly rational and necessary response to jurisdictional ambiguity. Over time, such consistent offshore structuring significantly dilutes the vital multiplier effects of local innovation, causing India to lose valuable jobs, essential ancillary services, and critical institutional learning to more welcoming and proactive jurisdictions abroad.
Existing government data subtly suggests that the current crypto taxation approach is already delivering tangible results. Income tax collections specifically derived from virtual digital assets successfully crossed the Rs 400 crore mark in the last reported financial year alone. Furthermore, transaction-level tax collections (TDS) have cumulatively exceeded an impressive Rs 1,000 crore since their initial introduction. These figures clearly point towards increasing compliance levels and a widening overall reporting base. It also highlights the subtle but undeniable fact that significant crypto participation is actively happening despite the current friction-heavy environment. This powerful insight indicates that even a modest, sensible tax rationalisation can genuinely improve and boost overall tax collections within our country's treasury.
For India, the larger, long-term opportunity extends far beyond mere revenue generation alone. Union Budget signals are incredibly crucial; they effectively tell the markets what specific activities are actively encouraged, what is merely tolerated, and what is explicitly discouraged. A measured recalibration in Budget 2026, one that would carefully preserve necessary safeguards while simultaneously easing existing bottlenecks, would send a loud and unequivocally clear message to innovators everywhere that their work is genuinely welcome here.
India does not need to rush headlong and recklessly into crypto adoption, nor does it need to retreat into a posture of excessive, paralysing caution. It needs to expertly steer a balanced course. The country’s well-documented digital success has always originated from thoughtful, inclusive design rather than simple exuberance. If Budget 2026 can successfully move crypto policy from its current state of ambiguity to one of clear, positive intent, it can ensure that India is not merely navigating the existing crypto maze, but is instead quietly and confidently redesigning it for the world.
Vikram Subburaj is CEO of Giottus.com