India’s government just told its own lawmakers what crypto skeptics have been saying for years: the virtual digital assets ecosystem is a minefield. In a note presented to the Parliamentary Standing Committee on Finance, senior officials formally categorized the entire VDA sector as “high risk,” citing intelligence reports that link it to everything from drug trafficking to cyber fraud.

The classification isn’t just regulatory posturing. It’s backed by a compliance gap so wide you could drive a truck through it. In FY23, only 1.39 lakh out of 6.45 lakh individuals subject to Tax Deducted at Source on crypto transactions actually reported their income. In English: roughly 78% of people who traded crypto and…