61% of crypto investors prefer stock or mutual fund-like taxation, 17% favor a standalone regime: CoinSwitch survey

Ahead of the February 1 Union Budget, a CoinSwitch survey shows that most respondents want crypto to be integrated into India’s mainstream financial tax system. About 61% of investors believe that cryptocurrencies should be taxed in the same way as stocks or mutual funds, while 17% prefer a separate tax framework. This reflects a preference for treatment that is consistent with established financial instruments.

Also read | PSU Bank ETFs gain up to 45% since the last budget. Is it time to profit or stay invested?The study includes insights from a nationwide survey that captures investor sentiment on the taxation and regulation of crypto (Virtual Digital Assets – VDAs) in India.Nearly 90% of respondents said they were aware of the key provisions, including the 30% tax on profits, the absence of loss carryforwards or carryforwards, and the 1% TDS on transactions. Despite this realization, a majority of respondents expressed concerns about the perceived fairness of the current framework. 66% believe the current crypto tax structure is unfair.

“The survey shows that investors are not looking for tax exemptions, but rationalization. Respondents are in favor of lower tax rates, loss relief provisions, lower TDS and clearer regulations aligned with established financial markets. The findings indicate that investors are informed, willing to comply and looking for a fair and predictable framework,” said Ashish Singhal, co-founder of CoinSwitch.

“As the Union Budget approaches, rationalizing crypto tax and providing regulatory clarity can support compliant onshore participation and contribute to a more transparent and regulated digital asset ecosystem,” Singhal added. Taxation also influences market behavior. A majority of respondents, almost 59%, reported reduced participation in crypto investing or trading due to the prevailing tax regime. This trend suggests that the current tax structure appears to be influencing participation patterns, potentially impacting trading volumes, liquidity and onshore market activity.In contrast, 17% said participation had increased, while 16% said taxation had no impact on their activities. At the same time, these segments of respondents reported stable or increased participation despite the tax regime. This suggests that some investors are taking a longer-term investment approach, valuing regulatory certainty over short-term tax considerations.

When it comes to information sources, respondents mainly rely on crypto platforms and exchanges (30%), followed by news media (27%) and social media (25%) for updates on crypto and taxes. This highlights the role of platforms in investor education and the importance of consistent, authoritative regulatory communications.

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In addition to taxes, the research highlights the importance of broader regulatory clarity. More than 80% of respondents consider clear regulation important, while 60% consider it extremely important, underscoring the view that tax reforms alone are not enough to build long-term investor confidence.

Overall, the policy sentiment expressed in the survey leans towards facilitation, with 51% of respondents believing that crypto should be encouraged as a new asset class in India. while 30% are in favor of cautious regulation. Only 7% believe that crypto should be actively discouraged.