Once disregarded as a random experiment, the cryptocurrency market has reshaped the narrative around money and finance. From peer-to-peer Bitcoin innovation to the multi-trillion-dollar ecosystem of Virtual Digital Assets (VDAs), the legal-regulatory evolution of decentralised ledger technology is as interesting as its emergence. In the context of India, the approach towards VDAs has been non-linear and cautious. The Reserve Bank of India first issued a risk advisory in 2013, warning users of fraudulent activities, thus disregarding crypto. The action was further calibrated in 2018 by prohibiting regulated entities (banks, NBFCs) from dealing with crypto businesses; however, the Supreme Court, in its 2020 judgment (Internet and Mobile Association of India vs RBI), overturned the RBI circular by flagging the ban as disproportionate.

A major decisive shift came with the Union Budget 2022, when a dedicated tax framework for VDAs was introduced with two major objectives—first, to bring a fast-growing asset class within the tax net; and second, to create transaction-level traceability in an anonymous ecosystem. Four years later, there is a fundamental question: how effectively has the policy expanded the tax base? This question embodies greater significance in the realm of India’s participation in the global crypto........

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