How global reporting may pull crypto bets out of the grey zone

offshore crypto holdings and transactions will increasingly become visible to tax authorities through automatic cross-border data sharing.The development comes against the backdrop of India’s crypto tax regime introduced in the Union budget 2022 that imposed a 30% tax on gains from virtual digital assets and a 1% tax deducted at source (TDS) on transactions. The high tax and compliance burden is nudging many traders to shift activity offshore, making cross-border reporting frameworks increasingly important.Before these regulations, the reporting structure for crypto was fragmented and voluntary.

While Indian exchanges followed basic know your customer (KYC) and anti-money laundering (AML) protocols, there was no formal mechanism for an automatic exchange of information between countries.Sonu Jain, a Mumbai-based chartered accountant explains the fundamental challenge of that era: "Crypto is borderless by definition... An Indian investor can open an account with a Cayman Islands crypto exchange, and the Indian government will never come to know about it, because there is no agreement between these two countries."It was essentially a game of ‘catch me if you can’.

If taxpayers didn't voluntarily disclose their foreign crypto holdings, the government had few tools to verify those assets. This gap led to the conceptualization of CARF during the G20 Summit held in India in 2022, rooted in the idea that if crypto moves across borders, tax data must move with it.For India, the transition began with the budget of 2025, which introduced Section 285BAA (in the income tax law).