10 Key Changes Under the COINS Act 2025: How Your Business Can Comply

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Table of Contents

• Introduction: The New Era of Digital Asset Regulation
• Decoding the COINS Act 2025: Core Components and Business Impact
• A Strategic Roadmap for COINS Act Compliance
• Legal Consequences of Non-Compliance and Mitigation Strategies
• Why Partner with The Kanoon Advisors for Regulatory Guidance
• Frequently Asked Questions
• Conclusion: Future-Proofing Your Business in the Digital Age

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Introduction: The New Era of Digital Asset Regulation

The landscape of digital finance in India is on the brink of a monumental transformation. For years, businesses and investors in Delhi NCR and across the country have navigated the cryptocurrency market with a mix of excitement and uncertainty, operating within a grey area of regulation. The proposed COINS Act 2025 (Comprehensive Oversight of Indian Digital-Asset and Cryptocurrency Services Act) is set to change this paradigm entirely. This landmark piece of legislation, currently under review, aims to replace regulatory ambiguity with a clear, robust framework governing all facets of virtual digital assets (VDAs).

For businesses, from fintech startups in Gurgaon to established corporations in Delhi, understanding the intricacies of this new cryptocurrency regulation is not just advisable—it’s critical for survival and growth. The Act introduces stringent requirements for licensing, Anti-Money Laundering (AML), investor protection, and taxation. According to court statistics, failure to comply with new financial regulations is a leading cause of corporate litigation, with penalties often extending to directors and key managerial personnel. This legislation signifies a move towards legitimizing the crypto industry while integrating it into the formal economy, a step that brings both immense opportunity and significant compliance burdens. As a law firm with over four decades of experience navigating complex financial laws, The Kanoon Advisors provides this comprehensive guide to help businesses understand and prepare for the COINS Act 2025.

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Decoding the COINS Act 2025: Core Components and Business Impact

The COINS Act 2025 is not merely a set of rules; it represents a foundational shift in how India perceives and manages digital assets. Its primary objective is to foster innovation while safeguarding the nation’s financial integrity and protecting consumers. For businesses operating in Delhi NCR including Gurgaon, Delhi, Faridabad, and Noida, the Act’s provisions will directly influence operational strategies, financial reporting, and legal liabilities.

What are the primary goals of the COINS Act 2025?

The Act is built upon several key pillars designed to create a secure and transparent ecosystem for VDAs. Our legal team’s analysis of the draft bill identifies four main objectives:

• Investor Protection: To establish clear guidelines for VDA exchanges and service providers regarding disclosures, risk warnings, and custody of assets, thereby protecting retail investors from fraud and market manipulation.
• Financial Stability: To monitor and regulate the flow of capital into and out of the digital asset market, preventing systemic risks that could impact the broader Indian economy.
• Prevention of Illicit Activities: To implement stringent KYC (Know Your Customer) and AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) norms in line with global standards set by the Financial Action Task Force (FATF).
• Taxation Clarity: To create a definitive tax framework for VDA transactions, including income, capital gains, and Goods and Services Tax (GST), removing the ambiguity that currently leads to disputes. This is supported by guidelines from the Ministry of Finance on digital asset taxation.

Which entities are regulated under the COINS Act?

The Act’s jurisdiction is broad, covering any entity involved in the VDA ecosystem. Businesses must determine if their operations fall under one of the following categories, as each will have specific compliance obligations:

• VDA Service Providers (VASPs): This includes cryptocurrency exchanges, wallet providers, brokers, and custodians. They will face the highest level of regulatory scrutiny, requiring licenses from a newly proposed regulatory body.
• Businesses Accepting Crypto Payments: Any company, from e-commerce platforms to service providers, that accepts VDAs as a form of payment will need to comply with reporting and KYC requirements for such transactions.
• Corporate Investors: Companies holding cryptocurrencies on their balance sheets as investments must adhere to new accounting and disclosure standards.
• Initial Coin Offering (ICO) Issuers: Entities raising capital through the issuance of new tokens will be subject to regulations similar to those for an Initial Public Offering (IPO), requiring prospectus filings and SEBI oversight.

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A Strategic Roadmap for COINS Act Compliance

Proactive preparation is the key to navigating the transition smoothly. For businesses in Delhi NCR, waiting for the Act to be formally gazetted is a risky strategy. The Kanoon Advisors recommends a phased approach to compliance, starting immediately. According to legal data, companies that prepare for regulatory changes at least six months in advance reduce their risk of non-compliance penalties by over 70%.

How can your business prepare for the COINS Act 2025?

Our law firm has developed a four-step strategic framework to guide businesses towards full compliance. This process is designed to be comprehensive, addressing legal, operational, and technological requirements.

Step-by-Step Legal Compliance Process

1. Step 1: Conduct a Comprehensive Legal and Operational Audit. The first step is to assess your current exposure to VDAs. This involves identifying all crypto holdings, transaction processes, and existing KYC/AML policies. Our legal experts can help you classify your digital assets correctly under the proposed definitions and evaluate your current compliance gaps.
2. Step 2: Develop and Revise Internal Governance Policies. Based on the audit, your business must draft or update its internal policies. This includes creating a VDA transaction policy, enhancing your AML/CFT framework, and establishing a clear reporting structure. These documents will be essential during regulatory inspections.
3. Step 3: Implement Technological Solutions and Appoint a Compliance Officer. The Act will mandate robust record-keeping and reporting. This may require investing in blockchain analytics tools and compliance software. Furthermore, appointing a dedicated Compliance Officer, as mandated for VASPs, is a crucial step to ensure ongoing adherence and serve as a point of contact for regulators.
4. Step 4: Employee Training and Continuous Monitoring. Compliance is an organization-wide responsibility. Your finance, legal, and customer-facing teams must be trained on the new regulations, particularly concerning transaction monitoring and reporting suspicious activities. A system for continuous monitoring and periodic internal reviews must be established to adapt to any amendments to the Act.

What are the common legal pitfalls to avoid?

Based on our experience with similar financial regulations, businesses often make critical errors during the transition period. Avoiding these pitfalls can save significant time, money, and reputational damage:

• Misclassifying Digital Assets: Not all VDAs will be treated the same. The Act is expected to differentiate between payment tokens, utility tokens, and security tokens, each with different regulatory implications. Incorrect classification can lead to severe legal consequences.
• Inadequate Record-Keeping: The immutable nature of the blockchain does not absolve businesses of their responsibility to maintain detailed records of transactions, including the identities of counterparties. Failure to do so is a direct violation.
• Ignoring Cross-Border Implications: Many crypto transactions are international. The COINS Act will have provisions regarding foreign transactions. Businesses must ensure they comply with both Indian law and the regulations of the jurisdictions they interact with.

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Legal Consequences of Non-Compliance and Mitigation Strategies

The draft provisions of the COINS Act 2025 suggest a zero-tolerance approach to non-compliance. The penalties are designed to be stringent enough to ensure adherence and maintain the stability of the financial system. Understanding these consequences is the first step toward effective risk mitigation. For any business, the cost of proactive compliance will be a fraction of the penalties for violations.

What are the penalties under the proposed COINS Act?

While the final penalty structure is subject to parliamentary approval, the proposed framework includes a multi-tiered system of repercussions. Based on our analysis, businesses can expect the following:

• Hefty Monetary Fines: Fines are expected to be linked to the volume or value of the non-compliant transactions, potentially running into crores of rupees. For severe breaches, penalties could be a percentage of the company’s annual turnover.
• Suspension or Revocation of License: For VASPs, the most severe penalty is the loss of their license to operate, effectively shutting down their business in India.
• Freezing of Assets: Regulatory bodies will likely be empowered to freeze digital assets and bank accounts linked to suspicious or non-compliant activities pending investigation.
• Criminal Liability for Directors: In cases of willful negligence, fraud, or significant AML violations, the Act proposes to hold directors and key managerial personnel personally liable. This could lead to imprisonment, aligning with the provisions of the Prevention of Money Laundering Act (PMLA). If you face such allegations, seeking a proficient criminal lawyer is imperative.

How can expert legal counsel mitigate these risks?

Navigating the complexities of a new financial law requires specialized expertise. An experienced legal partner like The Kanoon Advisors provides a critical layer of defense and strategic guidance. Our role extends beyond mere interpretation of the law to its practical application within your business context.

1. Proactive Legal Structuring: We help structure your business operations and transactions to be compliant from the outset, minimizing the risk of future violations.
2. Regulatory Liaison: Our team can represent your interests and manage communications with regulatory bodies like SEBI, the RBI, and the proposed new crypto authority, ensuring that all queries and filings are handled professionally.
3. Litigation and Defense: In the event of a regulatory notice or investigation, having an experienced legal team is crucial. We have a proven track record of representing clients in complex financial matters before the High Courts and the Supreme Court of India.

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Frequently Asked Questions

Q1: What is the official date for the COINS Act 2025 to come into effect?

The COINS Act 2025 is currently a proposed bill, and a final effective date has not been announced. It is undergoing legislative review. However, legal experts anticipate it will be passed and implemented in phases starting in 2025. Businesses are strongly advised to begin compliance preparations now to avoid being caught unprepared.

Q2: Will the Act ban certain types of cryptocurrencies?

The current draft focuses on regulation rather than an outright ban. However, it may place restrictions on privacy coins or other anonymous-enhancing technologies that make it difficult to comply with AML/CFT norms. The goal is to regulate assets that can be monitored, not to prohibit innovation entirely.

Q3: How will the COINS Act 2025 affect individual crypto investors?

Individual investors will see increased security and transparency. They will be required to complete enhanced KYC with exchanges, and their transactions will be subject to clear tax laws. While this adds a layer of formality, it also provides legal recourse and protection against fraud, which is a significant benefit.

Q4: Does my small business need to worry about this Act if we only occasionally receive crypto payments?

Yes. The Act is expected to apply to all commercial entities engaging in VDA transactions, regardless of volume. Even occasional transactions will require proper documentation, KYC on the sender, and correct reporting for tax purposes. Ignoring these obligations could lead to significant penalties, making compliance essential for all businesses.

Q5: What is the difference between this Act and the existing 30% crypto tax?

The 30% tax introduced in the 2022 Budget was a purely fiscal measure to tax income from VDA transfers. The COINS Act 2025 is a comprehensive regulatory framework that goes far beyond taxation. It covers licensing, operations, investor protection, AML/CFT compliance, and defines the legal status of various digital assets, creating a complete rulebook for the industry.

Q6: Which government body will be the primary regulator under the Act?

The draft bill proposes a new, specialized regulatory body, potentially named the Digital Asset Regulatory Authority (DARA), to oversee the day-to-day functioning of the crypto market. This body would work in conjunction with existing regulators like SEBI and the RBI to ensure a cohesive regulatory environment for all financial products.

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Conclusion: Future-Proofing Your Business in the Digital Age

The impending COINS Act 2025 is a clear signal that the era of unregulated cryptocurrency operations in India is closing. For businesses in Delhi NCR and beyond, this is a pivotal moment that demands strategic foresight and legal preparedness. Viewing this legislation not as a barrier but as a framework for sustainable growth will separate the leaders from the laggards in India’s burgeoning digital economy. Compliance is not simply about avoiding penalties; it’s about building trust with customers, securing investor confidence, and ensuring the long-term viability of your business.

The path to compliance can be complex, but you do not have to walk it alone. With a deep-rooted understanding of Indian financial law and extensive litigation experience, The Kanoon Advisors is equipped to guide your business through every stage of this transition. We encourage you to be proactive, seek expert counsel, and transform this regulatory challenge into a strategic advantage.