Unlocking India’s Crypto Future: The COINS Act Blueprint for Digital Assets

Are you a crypto enthusiast watching India’s regulatory landscape with bated breath? The wait for clarity might be nearing its end. A pivotal moment for India crypto regulation has arrived with the unveiling of the Crypto-systems Oversight, Innovation and Strategy (COINS) Act, a non-binding model law designed to transform the nation’s approach to digital assets. This blueprint, developed by Web3 venture firm Hashed Emergent and policy advisory group Black Dot, aims to shift India from a ‘regulatory minefield’ to a global destination for the crypto community. Let’s dive into how this proposed framework could reshape the future of cryptocurrency in India.

India Crypto Regulation: Addressing the Minefield

For years, India’s crypto space has grappled with significant challenges. Builders and users alike have faced a landscape marked by profound regulatory uncertainty and a lack of explicit legal rights. This environment has been characterized by:

• Punitive Taxation: A flat 30% tax on profits from virtual digital assets (VDAs) and a 1% Tax Deducted at Source (TDS) on transactions over $115.
• Unclear Mandates: Ambiguous Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements.
• Absence of a Dedicated Regulator: No specific body to oversee crypto activities, leading to fragmented oversight.
• Lack of Fundamental Rights: Users and developers lacked express legal rights concerning self-custody, financial privacy, and permissionless protocol access.

These pain points have not only stifled innovation but also led to a significant developer exodus, with many Indian decentralized finance (DeFi) protocols, crypto gaming studios, and infrastructure projects relocating offshore. The COINS Act seeks to actively reverse this trend by providing much-needed certainty and a rights-first approach to India crypto regulation.

The COINS Act: A Groundbreaking Crypto Law for India

The COINS Act is not just another set of recommendations; it represents a fundamental shift in policy philosophy. Instead of top-down restrictions, it begins by enshrining fundamental crypto rights as extensions of India’s Constitution, making them inviolable. This innovative approach provides layered fundamental rights calibrated to actual custody and control profiles:

• Centralized Exchanges: Subject to full licensing requirements, ensuring robust oversight for custodial services.
• Non-Custodial Protocols: Face a simpler disclosure regime, acknowledging their decentralized nature while maintaining transparency.
• Permissionless Protocols: Are fully exempt from compliance, fostering true innovation at the foundational layer.

A key recommendation of this crypto law India proposes the creation of a new regulatory body, the Crypto Assets Regulatory Authority (CARA). This dedicated authority would oversee all crypto activities, bringing much-needed coherence and expertise to the sector. Furthermore, the model law incorporates global best practices, drawing inspiration from the European Union’s Markets in Crypto-Assets Regulation (MiCA) and Singapore’s regulatory sandbox, adapting them to India’s unique market and constitutional context.

Digital Asset Policy: Reversing the Exodus

One of the most pressing issues for India’s crypto ecosystem has been the ‘brain drain’ of talented developers and projects moving offshore. The current regulatory guesswork and punitive tax regime have made it challenging for domestic innovation to thrive. The COINS Act aims to provide a robust digital asset policy framework that actively reverses this offshoring phenomenon. By offering rights-first certainty, innovation-safe harbors, and calibrated oversight, the model law intends to transform India into a destination of choice for the crypto community.

This strategic shift in digital asset policy is designed to foster a vibrant domestic ecosystem, encouraging developers to build and innovate within India. By clarifying the legal landscape and providing a predictable environment, the COINS Act hopes to retain talent, attract investment, and position India as a leader in the global Web3 space.

A Strategic Bitcoin Reserve for India?

Beyond regulatory clarity, the COINS Act introduces another fascinating proposal: the creation of a strategic Bitcoin reserve India. This innovative concept suggests that legally seized crypto assets could be converted into a national reserve, overseen by the parliament. The model law further proposes that this reserve could be seeded and topped up by confiscated assets and modest market buys.

This idea echoes recent calls from Indian politicians, such as Pradeep Bhandari of the ruling BJP party, who advocated for exploring a Bitcoin reserve pilot to strengthen the country’s economic resilience. A Bitcoin reserve India could potentially serve as a strategic asset, providing a new dimension to the nation’s financial stability and demonstrating a forward-thinking approach to digital economics.

Driving Adoption: Community and Collaboration for India’s Digital Asset Future

The creators of the COINS Act are not stopping at just releasing the model law. They are committed to pushing for its adoption through a multi-pronged strategy focused on community collaboration and direct engagement with policymakers. Hashed Emergent plans to co-host events with the Bharat Web3 Association, comparing the COINS Act with upcoming model regulations and the Department of Economic Affairs’ (DEA) discussion paper.

In parallel, Black Dot aims to conduct workshops with key governmental bodies, including the Ministry of Finance, the Securities and Exchange Board of India (SEBI), and the Reserve Bank of India (RBI), to present the model’s concepts for further discussion. This ‘strength in numbers’ ethos, inspired by the Bitcoin white paper, emphasizes that community collaboration, rather than back-room deals, will be crucial in moving this model law forward to policymakers. This collective effort is vital for shaping India’s future digital asset policy and ensuring it reflects the needs and potential of the crypto community.

Conclusion: A New Dawn for India’s Crypto Landscape?

The COINS Act represents a beacon of hope for India’s crypto community. By proposing a comprehensive, rights-first framework, it aims to dismantle the existing regulatory barriers and foster an environment ripe for innovation and growth. From clarifying taxation and establishing a dedicated regulator to enshrining fundamental digital rights and even proposing a strategic Bitcoin reserve, this model law offers a truly groundbreaking blueprint. While non-binding, its potential to influence future legislation is immense. The journey towards a clear and progressive India crypto regulation is complex, but with initiatives like the COINS Act, India is taking decisive steps towards unlocking its full potential in the global digital asset revolution.