Editorial 1: ​​​Regulating India’s virtual digital assets revolution

Context

There is a big difference between what is real and what policies say, causing problems for regulators and market participants.

Introduction

India remains the top country for grassroots crypto adoption for the second year in a row, according to the ‘Geography of Crypto’ report by Chainalysis (2024). A report by the National Association of Software and Service Companies (NASSCOM) shows that Indian retail investors invested $6.6 billion in crypto assets and expects the industry to create over eight lakh jobs by 2030. India also has one of the largest and fastest-growing groups of web3 developers.

Crypto’s Vibrancy Amid Regulatory Challenges in India

• Surprising Growth: Despite the rocky journey of crypto (called Virtual Digital Assets – VDA) in India’s regulatory and policy environment, the market remains vibrant.
• Supreme Court Observation (May 2025): The Supreme Court of India raised concerns about the lack of clear and complete crypto regulation, stating:
  “Banning may be shutting your eyes to ground reality.”
• Key Issue: This highlights the gap between the reality of VDAs and the policies around them, causing big challenges for both regulators and market participants.

India’s Challenges with Decentralised Virtual Digital Assets (VDAs)

Key Issues with Regulatory Framework

Aspect	Details
Capital Controls & Payments	India has strict capital controls and tight payment regulations that conflict with the decentralised nature of VDAs.
RBI’s Early Concerns (2013)	RBI warned about risks due to VDAs lacking central bank authorisation.
RBI Circular (2018)	RBI barred financial institutions from VDA dealings, but the Supreme Court overturnedthis in 2020.

Government’s Tax Measures on VDAs (2022)

Tax Policy	Purpose	Effectiveness
1% TDS on VDA transactions > ₹10,000(Section 194S)	Increase transparency and track transactions	Limited impact due to offshore trading
30% Capital Gains Tax (Section 115BBH)	Tax profits from VDA trading without loss offset	Did not stop tax evasion and speculation

Impact of Offshore Trading & Regulatory Evasion

• From July 2022 to Dec 2023, Indians traded over ₹1.03 trillion on non-compliant offshore platforms.
• Only 9% of the total ₹1.12 trillion in VDAs was held on domestic exchanges.
• Offshore trading caused a loss of ₹2,488 crore in uncollected tax revenue.
• Between Dec 2023 and Oct 2024, offshore trades reached ₹2.63 trillion.
• Estimated uncollected TDS from offshore trades is over ₹60 billion since July 2022.
• Nine blocked exchanges make up more than 60% of this offshore trade volume.

Attempts to Block Non-Compliant Platforms

Method	Outcome
URL Blocking	Temporary trade volume drop, but quick rebound
VPN & Mirror Sites	Users bypassed blocks, traffic increased by 57%
Migration to other exchanges	Continued trading on non-compliant platforms

Global Guidelines vs. India’s Current VDA Policy

Global Standards on VDA Regulation

Body	Key Focus
International Monetary Fund (IMF)	Supports comprehensive, risk-based regulation aligned internationally.
Financial Stability Board (FSB)	Promotes harmonised rules for financial stability.
Financial Action Task Force (FATF)	Focuses on anti-money laundering (AML) and counter-terror financing (CTF)controls.

• These frameworks depend on domestic, compliant intermediaries known as Virtual Asset Service Providers (VASPs).
• VASPs act as bridges between regulators and the VDA ecosystem, helping enforce laws, increase transparency, and provide feedback on real-world issues.

India’s Policy Challenges

• India’s current policies push VDA users to offshore, non-compliant platforms.
• This weakens India’s control over risks and causes loss of tax revenue.

Indian VASPs: Growing Stronger and More Responsible

Development	Impact
Closer collaboration with Financial Intelligence Unit (FIU-India)	Improved AML and CTF controls, praised by FATF.
Response to 2024 $230 million hack	Exchanges improved cybersecurity, created insurance funds, and developed industry-wide security guidelines.
Maturity & Compliance	Indian VASPs show willingness to follow regulations and act in good faith.

 

Need for a framework

• VASPs play a crucial role in creating a safer digital asset ecosystem.
• Along with supporting national value creation and economic growth, VASPs offer a better and more reliable way for funds to flow under Indian regulatory supervision.
• The current situation—where tax is imposed without clear regulation—needs to change.
• India requires a balanced, practical, and future-ready regulatory framework.
• Decisive action is needed to establish comprehensive laws that support the crypto industry while reducing risks.

Conclusion

India’s booming crypto market highlights the urgent need for clear, balanced regulation. While grassroots adoption and VASPs drive growth and innovation, current policies push users offshore, risking tax loss and weak oversight. To protect investors and the economy, India must enact pragmatic, future-ready laws that support industry growth while managing risks effectively.

Editorial 2: A sinking feeling for ‘Brand Bengaluru’

Context                

Not much attention is being paid to the problems caused by the city’s ‘growth.’

Introduction

For long-time residents of Bengaluru, it is starting to feel like too many things are happening at the same time. There are plans to extend Namma Metro to nearby cities. Work has begun on a suburban rail network. The State government is pushing for a controversial tunnel road network to connect traffic-heavy areas. Meanwhile, the city’s civic body, the Bruhat Bengaluru Mahanagara Palike (BBMP), is being divided into several corporations hoping they will manage the city better.

Little Focus on Existing Problems Amid New Projects

• These projects are planned for Bengaluru’s future growth, but existing problems caused by the city’s rapid expansion are being ignored.
• Heavy rains reveal the issues hidden beneath Bengaluru’s shiny image.
• Motorists get stuck on waterlogged roads; residential areas get flooded.
• Families affected by incidents like flooded underpasses or tree falls feel frustrated as government promises feel repetitive.

Record-breaking Rainfall in 2025

Period	Actual Rainfall (mm)	Normal Rainfall (mm)	Notes
Pre-monsoon (Mar 1 – May 31)	286	115	Highest in 125 years
May (entire month)	219	74	Record rainfall for May
May 1 – May 26	307.9	–	Recorded by India Meteorological Dept.
24-hour period (May 18-19)	105.5	–	Second highest since 2011

• Authorities were caught off guard despite preparing for the monsoon.

Increasing Frequency of Severe Weather Events

• High-impact weather is happening more often and stronger worldwide.
• Bengaluru experienced major flooding in 2015, 2017, 2020, and 2022.
• Karnataka suffered a drought in 2023, leading to a water crisis in 2024.

Neglected Lakes and Rivers

• Bengaluru once had a vast network of lakes that controlled flooding by storing rainwater.
• As the city grew, focus shifted to supplying water from the Cauvery river.
• Many lakes were destroyed for real estate, stadiums, and bus stands.
• Rivers like the Vrushabhavathy are still neglected and polluted.

Flood Mitigation Efforts Fall Short

• In 2024, treated water was added to some lakes to improve groundwater levels during the water crisis.
• Before the monsoon of 2025, 63 out of 183 lakes under BBMP were already full.
• This raises concerns about how much the city’s flood barriers have been weakened.

Drainage Issues

• Drains are clogged with silt and sewage, reducing their capacity.
• Overflow causes severe water-logging on streets.
• The Karnataka Lokayukta investigated and found:
  • Negligence by officials
  • Poor coordination between agencies
• Lokayukta ordered:
  • Speed up de-silting of drains
  • Ensure drains have a proper slope for water flow
  • Remove all encroachments blocking drains

Administrative Changes and Concerns

• The Greater Bengaluru Authority (GBA) will replace BBMP as the main city governing body.
• GBA will bring all major agencies under one roof, led by the Chief Minister of Karnataka.
• Some activists worry this will lead to centralised power and less local control.

Conclusion

It is unclear if this change will bring a more united and complete way to manage the city, especially with extreme weather events becoming common. The residents might still face the same problems if the focus stays on extravagant projects. Right now, it is too early to say what will happen.