India’s journey in the crypto space is progressing, although not without challenges. In an exclusive interview with Coinpedia, Ashish Singhal, Co-founder of CoinSwitch, sheds light on the current scenario, covering topics from Central Bank Digital Currencies (CBDCs) and the dominance of Unified Payments Interface (UPI) to Budget 2026, taxation, and the trend of startups considering offshore options.
UPI Dominates, But CBDC Plays a Different Game
Singhal emphasizes that India is not lacking in payment solutions, with UPI revolutionizing transactions, making payments seamless for various purposes. However, CBDC is not in direct competition with UPI; it serves a different purpose.
He clarifies that a CBDC is essentially digital currency issued by the central bank, functioning like physical cash but in digital form on mobile devices. Its true potential lies in targeted applications, such as programming government subsidies for specific uses and enabling instant distribution of emergency funds to citizens without intermediaries.
According to Singhal, while UPI acts as the “road,” CBDC serves as a new “vehicle” operating on that road. While users may not notice a significant change in their experience, the backend infrastructure becomes more robust.
Budget 2026: Clarity Without Relief
The India Budget 2026 maintained the status quo on crypto taxes, upholding one of the strictest regulatory frameworks globally.
Singhal views this as a measure to regulate retail participation rather than stifle it. Despite driving some activities offshore due to high taxes and a 1% TDS (Tax Deducted at Source), the regulatory framework has brought clarity and enhanced traceability.
He suggests that the government’s focus is on promoting responsible investing and compliance. However, a more balanced tax structure aligned with other asset classes could foster real growth while retaining innovation within India.
Startups Are Observing… and Relocating
Uncertainty in regulations poses a more significant challenge than taxes for startups in the crypto space.
Singhal notes that many Web3 entrepreneurs are gravitating towards jurisdictions like Dubai, Singapore, and Hong Kong, where clearer regulatory frameworks facilitate access to banking services, capital, and partnerships.
Despite India’s advantages, including a large developer community and user base, the absence of clear and proportionate regulations could erode its competitive edge over time.
Bitcoin ETFs and Future Developments
Regarding Bitcoin Exchange-Traded Funds (ETFs), Singhal adopts a pragmatic stance.
He explains that India is still laying the groundwork, determining the classification of crypto assets, regulatory oversight, and investor protection mechanisms. ETFs and similar products will only emerge once this foundation is established.
Despite the global momentum, especially following ETF approvals in the U.S., institutional interest in India is growing, particularly among investors seeking exposure to cryptocurrencies without direct ownership.
Why Regulation Lags Behind Adoption
Singhal concludes with a sobering observation.
Crypto transcends being just another sector, intersecting with capital controls, taxation, anti-money laundering (AML) measures, and financial stability. Consequently, multiple regulatory bodies are involved, leading to a naturally slower regulatory process.
He states that India is prioritizing a cautious approach, emphasizing risk mitigation through taxation and compliance while monitoring global regulatory trends.
Meanwhile, adoption proceeds swiftly, driven by market forces and outpacing regulatory structures. The convergence of speed and structure will ultimately shape India’s crypto landscape.
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