A forward-thinking blueprint for regulating digital assets in India, known as the Crypto-systems Oversight, Innovation and Strategy (COINS) Act, has been unveiled by the Web3 venture capital firm Hashed Emergent alongside the policy think tank Black Dot. This proposed framework, which is not legally binding in its current form, aims to foster a more transparent and industry-driven regulatory climate for cryptocurrencies throughout India. It specifically tackles critical legal challenges such as excessively high taxes, ambiguities in existing regulations, and the lack of a designated authority for crypto oversight.
The recommended legislative model advocates for the establishment of a new regulatory agency, christened the Crypto Assets Regulatory Authority (CARA), with the mandate to supervise all crypto-related activities within India. This framework draws inspiration from globally recognized standards, notably the European Union’s MiCA regulations and Singapore’s regulatory sandbox approach, adapting them to the specific economic and constitutional landscape of India.
Arvind Alexander, serving as legal counsel for Hashed Emergent, emphasized that the existing regulatory uncertainties in India were the primary impetus behind the development of the COINS Act. He pointed out the prevalence of delayed advisories lacking clear legal grounding. He further argues that cryptocurrency users currently lack basic rights in areas such as self-custody, personal privacy, and access to permissionless protocols. They also face a severe tax burden, and undefined anti-money laundering and know-your-customer rules.
Currently, the Indian Income Tax Act imposes a flat 30% tax on profits derived from the sale of virtual digital assets (VDAs). In addition, a 1% tax deducted at source (TDS) is levied on all transactions exceeding approximately $115, collected from either the buyer or the seller. The COINS Act is designed to address these concerns by embedding fundamental crypto rights within the framework of the Indian Constitution, thereby granting them inalienable status.
The proposed framework introduces a system of tiered fundamental rights, calibrated to reflect varying levels of custody and control. Centralized exchanges would be subject to comprehensive licensing requirements, while non-custodial protocols would adhere to a simplified disclosure regime. Fully permissionless protocols, on the other hand, would be entirely exempt from compliance obligations.
Vishal Achanta, also a senior legal counsel at Hashed Emergent, observed that over the past decade, many decentralized finance (DeFi) protocols, crypto gaming companies, and infrastructure projects originating from India have relocated overseas to avoid the country’s “punitive tax regime and regulatory guesswork.” The COINS Act seeks to reverse this migration by establishing clear rights, innovation-friendly safe harbors, and carefully designed oversight mechanisms, with the goal of transforming India into a favored location instead of a “regulatory minefield.”
The model law also puts forward a proposal for creating a strategic Bitcoin (BTC) reserve for the nation. According to the COINS Act, legally confiscated crypto assets would be transformed into a reserve managed by the parliament. This reserve would be seeded and supplemented through the appropriation of seized assets and modest market purchases. This follows after a recent call for India to explore a Bitcoin reserve pilot by an Indian politician.
Hashed Emergent is planning a joint event with the Bharat Web3 Association to compare the COINS Act with forthcoming regulatory models and the Department of Economic Affairs’ (DEA) discussion paper. Black Dot plans to conduct workshops with key stakeholders, including the Ministry of Finance, the Securities and Exchange Board of India, and the Reserve Bank of India, to present the model’s core principles and facilitate further dialogue.
Alexander stressed that their approach aligns with the fundamental principles of crypto. Community collaboration, rather than deals behind closed doors, will be key to pushing the model law forward with policymakers. This aligns with crypto advocate Sujal Jethwani’s views, who said India’s crypto users will eventually force the government to adopt favorable policies.