tl;dr
An Indian High Court expressed serious concerns about digital assets converting legitimate currency into untraceable forms, rejecting bail for businessman Umesh Verma accused of large-scale digital asset fraud involving at least 13 offenses and misleading investors with high return promises. The Sup...
An Indian High Court has raised significant concerns about the impact of digital assets on India’s economy, describing them as converting legitimate currency into an obscure, untraceable form. Justice Girish Kathpalia made these remarks while rejecting bail for a businessman accused in a digital asset-related corruption case, highlighting the serious nature of the allegations and the defendant’s involvement in at least 13 similar offenses. The court underscored the dangers posed by cryptocurrency’s potential to transform recognized money into "dark unknown and untraceable money," emphasizing the gravity of multi-victim scams linked to digital assets.
The businessman in question, Umesh Verma, associated with the Dubai-based Pluto Exchange, was ordered to surrender immediately following accusations of soliciting funds despite digital assets being derecognized. Allegations against him include misleading 61 investors with promises of 20% to 30% returns and continuing fraudulent operations despite warnings. The High Court noted the extensive scale of the alleged fraud and Verma’s financial resources as a significant flight risk. This ruling aligns with the Supreme Court of India’s recent sharp criticism of the central government’s delay in regulating digital assets, warning about widespread misuse and comparing unregulated cryptocurrencies to "hawala," an illegal underground money transfer system.
The Supreme Court also highlighted the enforcement challenges caused by the lack of a clear regulatory framework during the hearing of a bail plea involving another accused in digital asset fraud. The court reminded the government that a comprehensive policy was urged nearly two years ago and stressed the impracticality of banning digital assets outright. Instead, it called for an urgent regulatory foundation to address growing concerns in this sector.
Meanwhile, India’s Central Board of Direct Taxes (CBDT) is leveraging artificial intelligence (AI) and data analytics to combat tax evasion, utilizing vast datasets from domestic and international sources. CBDT Chairman Ravi Agrawal emphasized the selective use of digital access rights to avoid infringing on honest taxpayers' privacy. This AI-driven approach has led to over 11 million updated tax returns since April 2022, generating an additional revenue of approximately ₹11,000 crore ($1.33 billion). The department is also enhancing its capabilities to monitor emerging risks like the dark web and undisclosed foreign assets, signaling a modernization of tax enforcement amid digital economy growth.
Despite lacking formal regulatory frameworks, India has imposed strict tax measures on digital assets. The finance ministry reports a 63% growth in income tax collections from digital asset profits in the 2023–2024 financial year, amounting to ₹437.43 crore (about $50.6 million). This rise reflects expanding participation in digital asset trading, driven by a flat 30% tax on profits, a 1% tax deducted at source (TDS) on transactions, and an 18% Goods and Services Tax (GST) on trading fees introduced in April 2022. The tax regime, although stringent, underscores the government’s effort to control the sector financially while legal regulations remain in evolution.
On the policy front, Web3 firm Hashed Emergent and advisory agency Black Dot have proposed the Crypto-Systems Oversight, Innovation and Strategy (COINS) Act, aiming to clarify India’s digital asset regulations. This draft legislation envisions a pro-innovation regulatory environment balancing industry growth with user protection, including rights to self-custody and financial privacy. The COINS Act suggests establishing the Crypto Assets Regulatory Authority (CARA) to oversee digital assets, inspired by international models like the EU’s MiCA and Singapore’s sandbox approach. It also introduces strategic measures such as a Bitcoin reserve for India. While non-binding and pending parliamentary approval, the COINS Act represents a critical roadmap toward clear and constructive regulation, essential for accelerating India’s leadership in the global crypto market.