A Study on the Evolving Financial Landscape, Risk Dynamics and Institutional Integration of Cryptocurrency in India (Zenodo (CERN European Organization for Nuclear Research))

Summary

• Income from Virtual Digital Assets is subject to a 30% tax rate under Section 115BBH of the Income Tax framework.p.2
• Specified VDA activities were brought into the reporting-entity framework under the Prevention of Money Laundering Act in 2023.p.2
• FIU-India issued updated AML/CFT guidelines for VDA service providers in January 2026 after a registration circular in September 2025.p.2
• The Income Tax Department introduced Form 141 for specified TDS-related reporting on VDA transfers effective 1 April 2026.p.2
• The Finance Bill 2025 proposed expanding the statutory definition of VDAs effective 1 April 2026.p.4

Key insights

1. India integrates crypto-assets into its formal institutional structure using taxation rules and AML/CFT compliance mechanisms.p.3
2. The Reserve Bank of India differentiates private cryptocurrencies from sovereign Central Bank Digital Currency to protect financial stability.p.2
3. PMLA compliance requires VDA platforms to enforce reporting across fiat-to-crypto exchanges, crypto-to-crypto trades, and asset custody.p.2
4. Operational risks like security breaches, fraudulent platforms, and loss of access credentials endanger consumer capital in digital assets.p.2
5. BIS research showed direct exposure of mainstream banks to crypto-assets was modest, with activity focused in specialized exchanges.p.3
6. India's regulatory framework aims to balance technological innovation with consumer protection and anti-money laundering controls.p.1