Abstract

The global economy was rocked by the 2008 financial crisis, which also permanently changed how the public views conventional banking institutions. Parallel to this, a disruptive force in the shape of virtual digital assets arose, intended to do away with middlemen like banks and completely alter the financial environment. After fourteen years, these virtual digital assets have established an irrefutable presence, and the fight to influence the financial future has reached a captivating stage. The antiquated correspondent banking system, which dates back to the Medici era and still serves as the foundation for the majority of foreign transactions, is at the centre of this transition. However, because it relies on manual transaction records, this outdated system is inadequate to meet the needs of the quickly developing digital payments sector. The effects of this change go well beyond financial institutions; it has the ability to positively impact all facets of society. India's journey through the virtual digital assets landscape reflects a global struggle to adapt to this digital paradigm shift. The absence of comprehensive regulations leaves room for ambiguity, making it imperative for the Indian government to clarify the legal framework surrounding virtual digital assets. The impact of virtual digital assets extends far beyond national borders, necessitating international cooperation and coordination in regulatory efforts. As the world seeks to adapt to this digital revolution, India's stance on virtual digital assets regulation will have ripple effects on the broader global financial ecosystem. This paper delves into the regulatory landscape of virtual digital assets in India, a nation grappling with the multifaceted challenges posed by this transformative technology. To date, Indian regulations have primarily focused on taxation related to virtual digital assets trading income, alongside guidelines for cryptocurrency-related advertisements. Yet, a crucial ambiguity persists—the legal status of cryptocurrencies in India remains unclear.

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