India's burgeoning crypto ecosystem has received a significant impetus with the introduction of the COINS Act (Crypto-systems Oversight, Innovation and Strategy Act), a groundbreaking model law designed by Web3 venture firm Hashed Emergent and policy group Black Dot. This first-of-its-kind initiative aims to foster clarity, innovation, and robust user rights, marking a pivotal step towards establishing a progressive and consistent Web3 policy framework in the country.
The COINS Act, while currently non-binding, offers a clear and comprehensive blueprint for regulators and the industry. Its core philosophy prioritizes user empowerment and technological advancement, directly addressing long-standing pain points such as high taxes, regulatory ambiguity, and the absence of a dedicated crypto regulator in India.
Key Proposals of the COINS Act:
- Digital Rights at the Core: The Act firmly enshrines fundamental crypto-native rights as extensions of India's Constitution. These include the crucial rights to self-custody, financial privacy, and the freedom to deploy or interact with code, providing users with a strong legal foundation.
- A Crypto-Native Regulator (CARA): A significant proposal is the establishment of a dedicated Crypto Assets Regulatory Authority (CARA). This new body would possess limited powers, specifically focusing on handling crypto services based in India and avoiding interference with global decentralized protocols. This design aims to prevent overreach by traditional regulators like the Reserve Bank of India (RBI) or the Securities and Exchange Board of India (SEBI), ensuring a clear and focused oversight.
- Clear Rules for Control & Custody: The Act proposes a tiered regulatory approach based on the level of control and custody over digital assets. Centralized platforms would require full licenses, while non-custodial protocols would face a light disclosure regime, and fully decentralized protocols would be exempt from compliance.
- Safe Harbors to Boost Local Projects: To nurture domestic innovation, the COINS Act offers a time-limited "safe zone" for Initial Coin Offerings (ICOs) in India. This would provide a two-year window with simpler rules for token launches, allowing local crypto projects to grow without heavy restrictions. Additionally, it proposes a two-year pause on FEMA (Foreign Exchange Management Act) regulations to cut through red tape and allow for the development of more crypto-friendly policies. Developers would also be protected from being held responsible for how end-users utilize their protocols.
- Strategic Crypto Reserve: In a forward-thinking move, the Act suggests the creation of a national reserve of Bitcoin and other crypto assets. This strategic reserve is envisioned to strengthen India’s long-term digital sovereignty and could be seeded and topped up by confiscated assets and modest market buys.
Currently, Indian crypto users face a challenging environment marked by a 30% flat tax on crypto income and a 1% Tax Deducted at Source (TDS) on transactions, alongside unclear KYC/AML rules, often without corresponding basic legal rights. The COINS Act aims to fundamentally change this narrative by treating these rights as constitutional protections.
Hashed Emergent's report indicates that the Indian government is soon expected to release its long-awaited discussion paper on crypto regulation. The firms behind the COINS Act hope their pro-innovation blueprint will serve as a guiding document for the industry and policymakers, potentially turning India into a global leader in Web3 innovation rather than a "regulatory minefield."
July 2025, Cryptoniteuae