India's Crypto Wake-Up Call: Legalize VDAs Before Billions More Flee Offshore

Picture this: India slaps a hefty 30% tax plus 1% TDS on crypto gains, treating virtual digital assets like they're fully legit. Then it turns around and regulates them like they're shadowy outlaws—no protections, no clear rules. The result? A staggering exodus. Over 73% of trading volume has bolted to foreign exchanges, ₹4.8 lakh crore vanished offshore, and 180 startups packed up for friendlier shores. Now, AAP MP Raghav Chadha is sounding the alarm in Parliament, demanding legalization to bring it all back home.

Chadha didn't mince words in his Rajya Sabha speech. Twelve crore Indians— that's 120 million everyday investors—are routing their crypto plays through overseas platforms because domestic ones can't offer the security or clarity they crave. No dedicated anti-money laundering framework, no investor safeguards. It's a policy paradox driving talent and treasure away. The numbers hit hard. That 73% offshore shift isn't just stats; it's billions in lost liquidity for Indian exchanges. Startups fleeing to Dubai and Singapore? Nearly 180 of them, chasing regulatory sandboxes that India stubbornly avoids. Chadha argues for a smart fix: grant VDAs clear asset class status, roll out robust AML guardrails, and create a domestic sandbox. Not prohibition—regulation. This isn't radical. Global heavyweights like the EU, UAE, and Singapore are already reaping the rewards of balanced rules. India's sitting on a goldmine: proper compliance could unlock ₹15,000-20,000 crore in annual tax revenue while protecting retail traders from scams and volatility. Critics cry foul, warning of gambling or terror risks. But Chadha flips the script: prohibition isn't protection; it's a push toward unregulated wild west abroad. Legal status means oversight, transparency, and innovation staying put.

The offshore drain is crippling. Indian exchanges cling to just 27% of volume, starving local liquidity and jobs. Remittances, payments—stablecoins could supercharge them, but uncertainty keeps them sidelined. Legalization flips the switch: trading repatriates, startups return, tax coffers swell. Bitcoin, Ethereum, RWAs—all thrive under clear rules, drawing global capital. Budget 2026 whispers of tweaks, but Chadha's push adds real momentum, potentially sparking a bull run in Indian crypto stocks and volumes.

India stands at a crypto crossroads. Ignore Chadha's call, and the bleed continues—more volume offshore, more startups lost. Embrace it, and watch VDAs fuel the next economic boom. Regulation isn't surrender; it's smart strategy. Time to legalize, protect, and prosper. Sources: @raghav_chadha, livemint.com, cryptopolitan.com, inc42.com, bitget.com.