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India finally presents crypto oversight plan after RBI, tax office push for ban
Blockchain

India finally presents crypto oversight plan after RBI, tax office push for ban

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BlockchainJuly 24, 2026·5 min read

India’s parliamentary finance committee has recommended industry-run Self-Regulatory Organizations to oversee crypto markets under central bank or securities regulator supervision, offering a middle path between the RBI’s push for outright bans and the country’s 39 million unprotected retail traders. The proposal marks the first formal government oversight framework for digital assets in a nation that taxes crypto at 30% without legally recognizing it as an asset class.

  • Parliamentary committee recommends SROs supervised by RBI or SEBI to regulate crypto markets and protect 39 million traders currently operating without legal safeguards
  • India taxes crypto profits at 30% flat rate and applies 1% tax-at-source on transactions, yet has no legislation formally recognizing digital assets
  • RBI continues advocating for crypto bans, particularly targeting dollar-pegged stablecoins as threats to monetary sovereignty, while less than 25% of traders report profits
  • 39.3M KYC-verified crypto users holding approximately $2.4 billion in digital assets domestically
  • 30% flat tax rate on crypto profits, with 1% additional tax deducted at source on transactions
  • July 23 date Parliament received the Standing Committee’s 36th report recommending SRO-based regulatory framework

India has taken its first concrete step toward regulating cryptocurrency markets, but the path forward remains contested between institutional safeguards and continued pressure to ban digital assets entirely.

On July 23, Parliament received a formal recommendation from the Standing Committee on Finance proposing that industry-run Self-Regulatory Organizations oversee the country’s crypto trading under supervision from either the Reserve Bank of India or the Securities and Exchange Board of India.

The proposal attempts to bridge a regulatory void that has left 39.3 million KYC-verified traders exposed to operational risk while the government simultaneously imposes a 30% tax on profits and collects 1% tax-at-source on all transactions.

The framework reflects an international best-practice approach. The parliamentary committee studied regulatory models in the United Kingdom, Singapore, the United States, and the European Union before recommending the SRO structure as an interim solution pending permanent legislation.

Under the proposal, these organizations would enforce conduct standards for crypto exchanges, audit reserve holdings, legally segregate customer funds from corporate balance sheets, and manage customer complaints.

This interim approach acknowledges what India’s Ministry of Finance has stated plainly: digital assets currently sit outside the country’s regulatory perimeter except for taxation, anti-money laundering, and transaction reporting.

RBI maintains hardline stance against crypto despite regulatory framework proposal

The parliamentary recommendation arrives amid sustained pressure from India’s central bank to prohibit cryptocurrency outright. In May and June, the Reserve Bank submitted formal guidance to the committee opposing private crypto and particularly targeting dollar-pegged stablecoins as incompatible with India’s monetary sovereignty.

The RBI’s position reflects a consistent institutional skepticism toward digital assets that has shaped Indian policy for years, creating a fundamental tension at the heart of the government’s emerging approach.

Data from the RBI itself illustrates the market that policymakers are attempting to oversee. The central bank identified 54 FIU-registered service providers operating in India and 39.3 million KYC-verified users holding approximately $2.4 billion in domestic cryptocurrency holdings.

These figures establish the scale of activity that regulatory absence has enabled: nearly 40 million individuals trading in a market with no formal legal framework, no recognized asset classification, and no safeguards beyond the institutional safeguards the SRO model would introduce.

The RBI’s simultaneous push for bans reflects institutional concern that retail participation in unregulated markets creates systemic risk and currency instability.

Tax authorities align with the RBI’s skepticism. Officials noted that offshore trading proves difficult to track and that compliance remains minimal: fewer than 25 percent of the approximately 645,000 individuals who transacted in crypto during the year ending March 2023 actually reported their gains to tax authorities.

This compliance gap undermines the government’s 30% profit tax, suggesting that without regulatory oversight and reporting infrastructure, taxation remains aspirational rather than effective.

Regulatory void leaves 39 million traders without legal asset classification

India’s current crypto policy consists almost entirely of taxation without recognition.

The government imposes a flat 30% tax on cryptocurrency profits and levies a 1% tax-at-source deduction on all transactions, yet the Ministry of Finance explicitly states that crypto-assets fall outside India’s regulatory purview except for tax collection, anti-money laundering compliance, and transaction reporting to the Financial Intelligence Unit.

This creates an unusual legal status: profitable but unrecognized, taxed but unregulated, and formally invisible within India’s securities and banking frameworks.

The Standing Committee’s recommendation addresses this classification gap directly. The report notes that digital assets span multiple functional categories, some tokens behave like securities, others like derivatives, and many fall into entirely distinct categories, yet no legal definitions clarify these distinctions in Indian law.

Without statutory clarity, exchanges operate in legal ambiguity, customers face operational risk, and regulators lack enforcement tools. The SRO framework would establish interim conduct standards while Parliament drafts permanent legislation defining these categories and establishing formal regulatory authority.

This interim approach represents a pragmatic acknowledgment of political reality. A complete crypto ban faces resistance from the industry and the retail trader base, yet RBI concerns about monetary stability and regulatory risk remain legitimate institutional concerns.

The SRO model delays the full legalization debate while installing protective infrastructure for the 39 million existing traders and the broader market ecosystem.

Parliament must reconcile committee recommendation with RBI’s continued ban advocacy

The Standing Committee’s July 23 report now enters a critical phase of parliamentary and executive consideration. The recommendation exists in direct tension with the RBI’s explicit guidance to the same committee advocating prohibition, creating a decision point that India’s government must resolve before any statutory action can proceed.

The RBI’s concerns center on stablecoins specifically, with officials arguing that dollar-pegged tokens would undermine India’s monetary control and create currency substitution risks incompatible with a sovereign central bank’s policy objectives.

The committee framed the SRO approach as a temporary measure pending permanent legislation. This framing suggests Parliament recognizes that an outright ban, despite RBI support, would disrupt established market activity affecting millions of retail participants and numerous exchanges.

The SRO framework preserves the option for later prohibition while immediately installing safeguards and reporting infrastructure that would make any future regulatory transition more orderly. Whether the Finance Ministry and Parliament ultimately favor this incremental approach or opt for the RBI’s preferred prohibition remains the central open question.

The next decisive moment arrives when Parliament formally considers the Standing Committee’s recommendation and the Finance Ministry must clarify whether it endorses the SRO interim framework or aligns with RBI prohibition guidance. The framework’s viability depends on resolving that institutional tension, without clear government support, exchanges cannot establish regulatory infrastructure under unrecognized SROs, but without SRO implementation, India’s 39 million traders remain unprotected and the compliance gap that allows 75% of traders to avoid reporting continues unchecked.

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Japan was one of the first countries in the world to legally define and regulate crypto
DeFi

Japan was one of the first countries in the world to legally define and regulate crypto

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Japan’s financial regulator is preparing a significant overhaul of crypto regulation that could fundamentally reshape how the nation treats digital assets. The Financial Services Agency is examining a proposal to reclassify cryptocurrencies from payment instruments to financial products, a move designed to strengthen investor safeguards as the number of crypto accounts in the country has surged to 13 million. The deliberation comes amid mounting consumer complaints and evolving market realities that challenge the original regulatory framework.

The Case for Reclassification

During its sixth working group session on November 26, the FSA reviewed persistent issues within Japan’s crypto ecosystem. Data reveals approximately 350 consumer complaints related to cryptocurrency each month, alongside growing concerns about cross-border fraud and increasingly sophisticated cyberattacks targeting digital asset holders.

The proposed shift from the Payment Services Act to the Financial Instruments and Exchange Act would introduce substantially stricter requirements. Crypto businesses would face rigorous disclosure obligations, insider trading protections, and enhanced criminal penalties for violations. These regulatory mechanics already govern traditional securities markets and would create a more uniform framework for investor protection.

The prices of crypto assets like Ethereum or Bitcoin fluctuate far too much. So they also don’t really function as payment instruments.

— Professor Yoshikazu Yamaoki, Shinshu University

Professor Yamaoki of Shinshu University articulated a central tension in Japan’s current approach. He noted that extreme price volatility makes cryptocurrencies unsuitable as payment tools. Instead, market participants primarily engage in speculative trading—buying low and selling high—a behavior pattern indistinguishable from securities trading.

Industry Context and Global Positioning

Japan’s reconsideration of crypto regulation occurs within a broader context of evolving global digital asset governance. Since passing the Payment Services Act in 2017, Japan positioned itself as an early regulatory pioneer in cryptocurrency. However, that framework predated the explosive growth of decentralized finance, non-fungible tokens, and the maturation of institutional crypto adoption. The original classification as payment instruments reflected expectations that cryptocurrencies would function primarily as alternatives to traditional money transfer systems—a vision that has not materialized in practice.

Major economies including the United States, European Union, and Singapore have progressively adopted financial product classification models for most digital assets. The EU’s Markets in Crypto Regulation and the U.S. SEC’s evolving enforcement strategy treat cryptocurrencies as investment instruments requiring securities-level oversight. Japan’s proposed reclassification would align the nation with these international standards while addressing compliance gaps that have attracted regulatory scrutiny from trading partners and international financial bodies.

The FSA’s deliberations also reflect competitive pressures within Asia’s fintech ecosystem. Singapore’s progressive regulatory framework has attracted major crypto exchanges and institutional investors, while Hong Kong has established licensing frameworks that provide clarity to both established and emerging platforms. Japan risks becoming less attractive as a crypto hub if regulatory uncertainty persists, particularly as institutional capital increasingly seeks jurisdictions with transparent, comprehensive frameworks.

Tax Reform as Market Stimulus

Concurrent with the regulatory restructuring, the FSA working group is exploring a new tax treatment for crypto gains. The proposal would impose a flat 20% tax rate on cryptocurrency profits, aligning them with the taxation structure for stock trading. This represents a significant departure from current rules.

Current Tax Reality

Cryptocurrency profits are currently classified as miscellaneous income and taxed at rates ranging from 15% to 55% depending on an individual’s total income bracket, making high earners subject to significantly higher rates than stock investors.

Tatsuo Oku, representing the Blockchain Promotion Association, predicted that harmonizing crypto taxation with financial products would unlock additional market expansion. With 13 million existing accounts, he believes favorable tax treatment could substantially increase adoption among Japanese investors. The current tax burden has been cited as a deterrent to legitimate market participation.

The tax proposal carries profound implications for Japan’s retail investor base. Current regressive taxation has created arbitrage advantages for institutional and foreign investors who can structure transactions through lower-tax jurisdictions. Standardizing taxation would level the competitive landscape while generating sustained tax revenue for the government. Economic analysis suggests that lower, predictable tax rates typically expand the taxable base, ultimately increasing government collections even as individual rates decline.

Rintaro Kawai, CEO of ANAP Holdings, which operates a Bitcoin trading operation in Japan, expressed frustration with the nation’s current position. He argued that Japan is “significantly behind” in global Bitcoin adoption and warned the country faces an uncertain economic future without decisive tax and regulatory modernization. His comments reflect broader industry sentiment that Japan risks losing competitive advantage in the digital asset sector.

Distinguishing Digital Assets

The Bitcoin Classification Problem

A critical divide has emerged within regulatory discussions regarding how to categorize different types of digital assets. The FSA is exploring models that would classify tokens based on whether they have an identifiable issuer—such as a company or development foundation backing the project.

This distinction addresses a fundamental difference within the crypto ecosystem. Bitcoin operates as a decentralized network with no central issuer or controlling entity. Ethereum, XRP, and most other tokens have identified development organizations responsible for their creation and governance.

If Japan does not adopt this distinction, the regulatory framework will tilt toward traditional financial institutions, banks, and brokerages.

— Rintaro Kawai, ANAP Holdings CEO

Kawai emphasized that failing to distinguish between Bitcoin and other token classes would create unintended consequences. A one-size-fits-all regulatory approach would advantage traditional financial players while constraining the development of genuinely decentralized systems. Globally, Bitcoin has increasingly been treated as a separate asset class precisely because of its architectural differences from tokens with identifiable issuers.

The issuer classification framework would have market-wide implications. Digital assets with identifiable development teams could face heightened scrutiny regarding continuous disclosure obligations, development roadmap transparency, and potential liability for token performance. Pure peer-to-peer systems like Bitcoin would logically receive different treatment, recognizing that no entity exists to regulate or hold accountable for token behavior.

Market Impact and Implementation Concerns

The regulatory transition would carry significant consequences for Japan’s crypto infrastructure. Oku acknowledged that while moving to FIEA oversight would strengthen market credibility through enhanced disclosure requirements, it would simultaneously impose securities-level compliance burdens on crypto businesses. Smaller exchanges lacking resources for complex regulatory compliance could face pressure to consolidate or exit the market.

Key Metrics

Japan’s crypto market has expanded dramatically: account numbers grew from approximately 3 million five years ago to 13 million today. Monthly consumer complaints average 350 cases, reflecting both market growth and unresolved protection gaps.

Industry consolidation among Japanese exchanges would likely accelerate following implementation of stricter financial product regulations. Larger platforms with institutional-grade compliance infrastructure would absorb market share from smaller competitors, potentially reducing retail investors’ choice of trading venues. However, this concentration could paradoxically strengthen market integrity by concentrating trading volume on platforms capable of maintaining sophisticated surveillance and customer protection systems.

The working group’s deliberations suggest that Japanese regulators recognize the crypto market has matured beyond its original characterization as a payment innovation. Instead, it functions as a speculative asset class that warrants financial product-level oversight. However, the precise implementation remains contested, particularly regarding how to fairly treat Bitcoin versus other digital assets.

Japan’s approach carries implications beyond its borders. As one of the first nations to legally define and regulate cryptocurrencies, any framework modifications signal evolving international perspectives on digital asset governance. The tension between investor protection and market competitiveness that Japan navigates mirrors similar debates in other developed economies. Jurisdictions including the UK, Canada, and Australia are closely monitoring Japan’s regulatory evolution, as any framework successfully implemented by a major economy often influences international harmonization efforts.

Conclusion: A Critical Inflection Point

Japan stands at a regulatory inflection point where decisions made in coming months will determine whether the nation becomes a global leader in digital asset governance or cedes market dominance to competitors. The FSA’s proposal to reclassify cryptocurrencies and harmonize taxation represents a pragmatic acknowledgment that original payment-instrument frameworks no longer match market reality. Combined with the flat 20% tax proposal, these reforms could simultaneously strengthen investor protections and stimulate market participation among sophisticated Japanese investors currently deterred by regulatory uncertainty and punitive taxation.

Success depends on implementation precision, particularly regarding the proposed Bitcoin classification distinction. A framework that recognizes architectural differences between decentralized systems and token ecosystems with identifiable issuers would position Japan as a regulatory sophisticate that understands technological nuance. Conversely, undifferentiated financial product classification would signal regulatory immaturity and potentially drive decentralized protocol development and institutional adoption to more favorable jurisdictions.

The competitive stakes are substantial. Japan’s 13 million crypto accounts represent a significant retail investor base that could expand dramatically under favorable regulatory and tax conditions. The global cryptocurrency market exceeds $2 trillion in capitalization, with institutional adoption accelerating as traditional financial institutions develop crypto capabilities. Japan’s decisions regarding reclassification and taxation will substantially influence whether these gains accrue within the nation’s borders or migrate to jurisdictions perceived as more stable and investor-friendly.

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Belarus President calls for tightened crypto regulation to protect investors and economy
Regulation & Policy

Belarus President calls for tightened crypto regulation to protect investors and economy

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Belarus President Aleksandr Lukashenko has demanded his government implement stricter crypto regulation, citing widespread investor losses and gaps in current oversight frameworks. Speaking at a high-level government conference on September 5, Lukashenko pointed to a state audit revealing that approximately half of all citizen investments directed to foreign cryptocurrency platforms have failed to return, underscoring what he views as critical vulnerabilities in the country’s regulatory approach.

The Audit Findings and Presidential Pressure

The State Control Committee’s inspection uncovered two significant problems. First, foreign crypto platforms are absorbing substantial citizen capital without adequate investor protections. Second, domestic platforms are operating with registration violations that allow financial operations to proceed outside proper regulatory channels.

Lukashenko characterized the situation as unacceptable, asserting that his government has delayed action for years. He revealed that he had ordered a comprehensive regulatory framework for digital tokens and cryptocurrencies as far back as 2023, yet binding legislation has still not materialized on his desk.

The President criticized the government for allowing “digital life” to outpace the law, urging officials to finalize regulations that guarantee financial stability while protecting investors.

— Belarus Presidential Statement, September 5

Key Fact

Approximately 50% of Belarusian citizen investments sent to foreign crypto platforms have not returned, according to state audit findings.

Understanding Belarus’ Position in the Crypto Landscape

Belarus has carved out a unique position within Eastern European cryptocurrency markets over the past decade. The nation’s relatively open stance toward digital assets attracted blockchain developers, mining operations, and fintech entrepreneurs seeking alternatives to more restrictive jurisdictions. This approach generated tax revenue and positioned Minsk as a competitive hub for technology innovation in a region where regulatory uncertainty often prevails.

However, this permissive environment came with costs. The influx of foreign platforms and the lack of standardized oversight created conditions ripe for investor exploitation. Unlike regulated financial markets where disclosure requirements, capital adequacy standards, and customer asset segregation are mandated, Belarus’ crypto sector operated with minimal such protections. This gap between regulatory ambition and market reality has finally captured presidential attention at the highest levels.

The scale of capital flight cited in the audit—with 50% of invested funds disappearing into unrecoverable positions—suggests losses potentially exceeding hundreds of millions of dollars. For a country of approximately 9.3 million people with a GDP of roughly $68 billion, such concentrated losses among retail investors represent both an economic and political liability that can no longer be ignored.

The Current Regulatory Framework and Its Limits

Belarus currently governs digital asset activity through the Hi-Tech Park, a special economic zone established under Ordinance No. 8. This framework was designed to stimulate the country’s information technology sector by providing legal structures for token creation and trading.

While Lukashenko acknowledged the existence of this special economic zone approach, he explicitly rejected it as sufficient for managing modern cryptocurrency markets. The framework, he indicated, was designed for a different era and lacks the protective mechanisms now required.

The President signaled that traditional state agencies would soon assume expanded roles in cryptocurrency oversight, suggesting a shift away from the current special economic zone model toward conventional regulatory bodies. This represents a fundamental change in how Belarus approaches digital asset governance.

The country is also exploring the creation of a central bank digital currency tied to the Russian ruble, adding another layer to its broader digital financial strategy.

This regulatory pivot mirrors approaches taken by other countries that initially adopted light-touch crypto frameworks. El Salvador, while maintaining a pro-Bitcoin stance, eventually implemented stricter exchange oversight. Switzerland expanded its Financial Market Supervisory Authority mandate to encompass digital asset service providers after recognizing gaps in investor protection. Even crypto-friendly jurisdictions like Malta and Singapore have tightened requirements as they matured their regulatory ecosystems.

Regulatory Objectives

Balancing Security With Market Development

Lukashenko’s stated objectives reflect a dual mandate. On one hand, he emphasized the need for transparent rules, standardized safeguards, and capital controls that keep investor funds within Belarus’ borders.

On the other hand, he acknowledged the value of maintaining what he termed a “digital haven” for legitimate local businesses and foreign investors. This apparent contradiction reflects a common challenge for regulators: how to protect citizens without stifling innovation or economic opportunity.

The government aims to create transparent rules for market participants while ensuring funds remain within the country, all while allowing legitimate local businesses and foreign investors to continue operating.

— Presidential Directive Summary

Timeline

No official timetable for new crypto regulations has been announced, though Lukashenko’s ultimatum suggests significant regulatory changes are likely within months.

The challenge of maintaining this balance has proven difficult globally. Regulators in jurisdictions ranging from major developed nations to emerging markets have grappled with identical tensions between consumer protection and sector growth. Germany’s BaFin, for instance, expanded licensing requirements for digital asset trading platforms while attempting to preserve the country’s fintech competitiveness. Hong Kong adopted a dual licensing system allowing both professional and retail-focused platforms under different rulesets.

For Belarus, the stakes are particularly high given the country’s geopolitical isolation and dependence on economic diversification. The technology sector remains one of few areas where Belarus can attract foreign capital and talent without relying on commodity exports or regional political alignments. Overly restrictive regulation could drive legitimate operators to neighboring countries, while insufficient safeguards perpetuate investor losses that undermine public confidence in digital markets.

Market Implications and Regional Dynamics

The regulatory shift in Belarus will have ripple effects across Eastern European crypto markets. Many platforms currently operating from Minsk serve customers throughout Russia, Ukraine, Moldova, and neighboring regions where cryptocurrency regulation remains uncertain or hostile. If Belarus implements comprehensive licensing and compliance requirements, platforms may relocate to jurisdictions offering more favorable treatment, or they may simply cease service to Belarusian citizens.

Conversely, if the new framework establishes Belarus as a trustworthy, transparent jurisdiction for digital asset trading with genuine investor protections, it could attract institutional players and legitimate retail investors who currently avoid the region due to regulatory concerns. Countries including Switzerland and Singapore demonstrated that rigorous regulation combined with innovation-friendly policies can attract rather than repel capital.

The timing of Belarus’ regulatory initiative also reflects broader post-pandemic developments. Global cryptocurrency adoption accelerated significantly between 2020 and 2023, and with it came increasing regulatory pressure from international bodies including the Financial Action Task Force and the International Organization of Securities Commissions. Belarus cannot indefinitely maintain a permissive approach without facing reputational costs and potential sanctions related to financial compliance and anti-money laundering standards.

What’s Next for Belarus Crypto Markets

The absence of a published timeline suggests ongoing internal debate within Belarusian government agencies about implementation details. However, Lukashenko’s direct intervention and unambiguous language indicate that cryptocurrency regulation will receive accelerated attention.

Market participants operating in Belarus should anticipate a significant increase in state scrutiny across the coming months. The shift from special economic zone governance to traditional regulatory oversight will likely introduce new compliance requirements, reporting standards, and potentially capital control mechanisms.

Expected regulatory areas may include mandatory licensing for cryptocurrency exchanges and custodians, reserve requirements ensuring platforms maintain customer assets in segregated accounts, KYC (Know Your Customer) and AML (Anti-Money Laundering) compliance aligned with international standards, limits on leverage and margin trading to protect retail investors, and structured dispute resolution mechanisms for customer complaints.

For investors and traders focused on digital asset markets, understanding these regulatory developments matters. Belarus has positioned itself as a relatively crypto-friendly jurisdiction in Eastern Europe, and any regulatory tightening could reshape investment flows in the region.

The presidential directive also reflects broader global trends. Governments worldwide are moving away from light-touch regulation toward more comprehensive frameworks designed to protect retail investors while maintaining market functionality. The European Union’s Markets in Crypto Assets Regulation establishes baseline requirements for member states. The United States continues developing comprehensive legislation. Even developing nations are establishing clearer crypto regulatory frameworks.

Belarus’ forced reckoning with cryptocurrency regulation demonstrates that jurisdictions cannot indefinitely rely on permissive approaches while investor losses mount. The outcome of its regulatory reform efforts will likely influence how other Eastern European countries approach similar challenges, potentially establishing regional standards for digital asset governance.

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