India’s Financial Intelligence Unit (FIU) has initiated a public consultation on proposed regulations aimed at strengthening oversight of the cryptocurrency sector. The draft framework would require all registered digital asset service providers to collect detailed data on each transaction, including timestamps, coin types, counterparty identities, and transaction values. The FIU states that enhanced reporting will support anti–money laundering efforts and ensure that taxable events are accurately captured within the national tax system.
The consultation paper outlines that exchanges would be obligated to report transaction data monthly to the FIU and to India’s Income Tax Department. Failure to comply could result in substantial fines, withdrawal of registration, and potential criminal penalties for senior executives. Industry stakeholders have raised concerns about the operational burden of compiling such granular data, especially for smaller platforms, and have called for phased implementation timelines and clear guidance on data privacy protections.
Proponents of the new measures argue that the rapid growth of decentralized finance and peer–to–peer trading has created significant regulatory gaps, exposing India’s financial system to the risks of illicit fund flows. They note that while the country has imposed a flat 30% tax on crypto gains and introduced a 1% tax withheld at source, inconsistent reporting and cross–border trading obfuscate the actual size of the market and may undermine revenue collection.
Critics warn that excessive reporting requirements could stifle innovation and drive trading volume to unregulated offshore platforms. They urge policymakers to balance the need for transparency with measures that support growth, such as regulatory sandboxes, clear licensing pathways, and consumer education programs. As the consultation period closes, industry and advocacy groups are preparing detailed submissions to shape India’s next phase of digital asset regulation.
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