How global reporting may pull crypto bets out of the grey zone

India has operationalized a reporting framework aligned with the OECD's Crypto-Asset Reporting Framework

- Ann Jacob

For years, crypto trades and the digital asset space itself operated in what many describe as a regulatory no-man's land. An investor in Mumbai could open an account on an exchange in any offshore financial hub with a flexible regulatory and tax regime, freely trade digital assets, and remain largely beyond the visibility of Indian authorities.

The Union budget of 2026 seeks to change that. Through a series of legislative changes introduced across the budgets of 2025 and 2026, India has operationalized a reporting framework aligned with the OECD's Crypto-Asset Reporting Framework (CARF), aiming to move crypto from an opaque asset class into a transparent financial instrument integrated with the global tax reporting system.

For investors, this means offshore crypto holdings and transactions will increasingly become visible to tax authorities through automatic cross-border data sharing.

The development comes against the backdrop of India’s crypto tax regime introduced in the Union budget 2022 that imposed a 30% tax on gains from virtual digital assets and a 1% tax deducted at source (TDS) on transactions. The high tax and compliance burden is nudging many traders to shift activity offshore, making cross-border reporting frameworks increasingly important.

How the space used to be

Before these regulations, the reporting structure for crypto was fragmented and voluntary. While Indian exchanges followed basic know your customer (KYC) and anti-money laundering (AML) protocols, there was no formal mechanism for an automatic exchange of information between countries.

Sonu Jain, a Mumbai-based chartered accountant explains the fundamental challenge of that era: "Crypto is borderless by definition...An Indian investor can open an account with a Cayman Islands crypto exchange, and the Indian government will never come to know about it, because there is no agreement between these two countries."