India lacks comprehensive cryptocurrency regulation despite growing adoption. RBI prohibits banks from servicing crypto businesses since 2018. SEBI has no direct jurisdiction over cryptocurrencies currently. Finance Ministry imposed 30% tax on crypto gains plus 1% TDS from April 2022. Parliamentary committee recommended treating cryptocurrencies as financial assets under SEBI regulation. Government exploring Central Bank Digital Currency (CBDC) while maintaining cautious stance on private cryptocurrencies. Regulatory clarity remains pending.

India's cryptocurrency regulatory landscape reflects tension between innovation and financial stability. The RBI's banking ban stems from concerns over money laundering, consumer protection, and monetary policy effectiveness. Unlike securities, cryptocurrencies don't fall under SEBI's current mandate, creating regulatory gaps. The 30% tax rate signals government recognition of crypto as legitimate asset class while discouraging speculation. Parliamentary recommendations favor bringing cryptocurrencies under securities regulation, which would expand SEBI's role significantly. This shift would require amending SEBI Act and Securities Contract Regulation Act. The government's CBDC pilot through RBI aims to capture digital currency benefits while maintaining central bank control. Key challenges include defining cryptocurrency legal status, preventing systemic risks, protecting retail investors, and balancing innovation with financial stability. International coordination remains crucial as cryptocurrencies transcend borders. The regulatory framework's eventual shape will determine India's position in global crypto ecosystem and influence institutional adoption.