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Member of Parliament (MP) and AAP leader Raghav Chadha has urged the Centre to legalise virtual digital assets (VDAs) such as cryptocurrency and stablecoins.

Speaking during Budget discussion in the Upper House of Parliament on 9 February, Chadha said that the Union government should take steps to build a compliance framework for VDAs and then heavily regulate the sector.

“ The need of the hour is to build a compliance framework for cryptos and heavily regulate these VDAs… This will bring INR 15,000 Cr to INR 20,000 Cr into the government’s coffers. We currently tax these digital assets as if they are legal, but we regulate them as if they are illegal… Prohibition isn’t protection, regulation is protection,” said Chadha.

Chadha flagged that India, despite de facto legalised taxation for cryptos, did not recognise VDAs as an asset class. Making his point, he further added that the country lacked dedicated licencing laws for virtual assets and customer protection frameworks for crypto investors.

Due to this heavy taxation regime, the AAP MP claimed, INR 4.8 Lakh Cr worth of trade in VDAs had moved to offshore platforms. He also claimed that 180 local crypto startups moved overseas to Singapore and the UAE due to the Centre’s clampdown on VDAs.

As such, he urged the government to ringfence the crypto ecosystem, strengthen anti-money laundering frameworks and bring crypto volumes back home.

India is among a handful of nations globally, which have so far been reluctant to allow cryptocurrencies and stablecoins despite heavy lobbying. The Centre has also opted for a heavy taxation regime to curb crypto volumes.

The government began levying a 1% tax deducted at source (TDS) on crypto transactions above INR 10,000 and a hefty 30% capital gains tax in 2022. The government collected INR 705 Cr in taxes from VDA income between FY23 and FY24.

Alongside, tax authorities have mandated registration of entities dealing in crypto and other VDAs. Many crypto exchanges have been banned and issued show-cause notices in the past few years for not complying with local norms and for not registering with the Financial Intelligence Unit (FIU).

Not stopping there, finance minister Nirmala Sitharaman in Budget 2026 also proposed increasing the compliance burden for crypto startups and a new penalty framework for non-compliance.

Under the proposals, entities dealing in cryptocurrencies and virtual assets could face a penalty of INR 200 per day for non-furnishing of transaction statements and a flat INR 50,000 for furnishing inaccurate particulars or failing to correct them.

The updated guidelines also propose mandatory live detection through selfies and geo-tracking during the onboarding process, along with additional compliance measures for crypto exchanges.

The post Legalise Virtual Digital Assets: MP Raghav Chadha To Govt appeared first on Inc42 Media.