Speaking during the Rajya Sabha session, Aam Aadmi Party (AAP) MP Raghav Chadha raised a critical alarm regarding India’s stance on Virtual Digital Assets (VDAs). He urged the government to legalize crypto assets as a new asset class.
Chadha pointed out a glaring systemic paradox: while the government aggressively collects a 30% flat tax on profits and a 1% Transaction Tax (TDS), it refuses to grant these assets a formal legal classification.
“We currently tax these assets as if they are legal, but we regulate them as if they are illegal,” Chadha remarked, noting that this “half-way” approach is the primary driver behind a massive drain of domestic wealth and talent.
The Push for Onshore Regulation
The impact is threefold. Primarily, 12 crore Indian investors are currently forced to use offshore platforms to trade in Crypto, Stablecoins, and Real-World Assets (RWA), leaving them vulnerable.
180 VDA startups have migrated their operations to crypto-friendly hubs. Finally, the Indian Government is losing out on significant revenue that could be captured through a more comprehensive regulatory net.
Chadha’s suggestion to the government is the formal legalization of VDAs as an asset class. This would involve creating a dedicated licensing law, establishing clear consumer and investor protection mandates, and implementing robust Anti-Money Laundering (AML) guidelines specifically tailored for digital assets.
Due to the lack of an onshore regulatory “ring-fence,” Indian capital is flowing into Dubai, Singapore, and Malaysia. These jurisdictions have provided the “explicit legal classification” that India currently lacks, attracting Indian investors and entrepreneurs alike.
73% of India’s Crypto Trading Volume Moved Offshore
The MP highlighted that in Financial Year 2025, a staggering 73% of India’s crypto trading volume moved to offshore exchanges. This trend is accelerating as the industry seeks the stability of a formal legal framework.
The MP argues that “prohibition is not protection; regulation is protection.” Without an official asset class status, there are no “rules of the road,” making the ecosystem a “Wild West” for retail investors. By bringing these assets “onshore,” the government can ensure compliance, mitigate money laundering risks, and foster domestic innovation.
By heavily regulating and “ring-fencing” the ecosystem, the government can turn a grey market into a transparent, tax-compliant sector. Chadha estimated that this move would result in ₹15,000 to ₹20,000 crore in additional tax revenue being deposited into the government treasury, while simultaneously protecting the interests of the middle-class investor.
Chadha concluded his intervention by urging the government to recognize the reality of the digital economy. Rather than allowing ₹4.8 lakh crore to circulate outside India’s borders, he suggests that a bespoke legislative framework would transform India into a global hub for blockchain and virtual assets, ensuring that both the investors and the exchequer are protected.
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