The language of finance is changing, and the emergence of digital assets marks a new milestone in the investment ecosystem. An asset class that started as an experiment has now matured into a recognized phenomenon, with institutional rails and real-world use cases. Digital assets as an asset class have also seen investment interests from not only institutional investors, but also governments across the world are eager to have this asset class on their treasuries.
Yet, to achieve success in this genre of finance, curiosity shall be dealt with caution. Direct investing in digital assets is not about speculation; while that may be a factor, the strength of it lies in ownership of the underlying asset, rather than taking the first leap through a fund or ETFs.
This ownership not only brings challenges but also responsibility. Investors must carefully consider where they buy, how they store, how they document transactions for tax purposes, and how they will eventually exit. The precision it offers, exposure to specific protocols, projects, or tokenized assets, comes with operational and compliance challenges.
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The terrain itself is far from uniform. While Bitcoin and Ethereum remain the base, functioning as digital settlement layers, other scalable networks have grown around them to create a diverse ecosystem.
A few examples of this would be Solana, fiat-linked stablecoins, decentralized finance protocols, and tokenized representations of real-world assets. The ground of digital assets is evolving and adding new opportunities every passing day. Each of them comes with their own risk profiles, be they technological, regulatory, or governance-driven concerns. We should thus not limit the metaverse to the word “crypto,” as it brings new opportunities every passing day.
When dealing with digital assets directly, investors need to know that volatility, like any other market, remains the defining characteristic here. Price swings of 20 percent in a week are not anomalies but features of a market still in early discovery. For serious investors, the lesson is not avoidance but preparation.
Allocation must be measured, liquidity buffers maintained, and horizons extendedso that fundamentals, rather than daily headlines, determine the outcome. Volatility was one part of it; another is regulation. Let’s not ignore the importance of regulatory frameworks.
In India, gains from virtual digital assets are taxed at 30 percent under Section 115BBH, with a one percent TDS on transactions ensuring a compliance trail. Losses cannot be offset. Globally, regulators are setting clearer guardrails on custody, disclosures, and safeguards for investors.
The commonnthread is that compliance is no longer optional; it is the price of admission to this asset class. To any sophisticated investor out there, overlooking regulations would be the biggest negligence.
Infrastructure and custody deserve the same amount of attention as asset selection. Compliant and regulated bodies with clear compliance and segregation of assets reduce counterparty risk. Some investors use professional services to store their assets for safety and insurance.
Others keep them themselves for more control, but it’s riskier and needs technical skills. Many do both, most with custodians, a small part in self-storage for direct use.
In essence, investors have to follow the same discipline that they have applied to any asset class. We shall look into what underlying problems the asset solves, what kind of investors it will bring, and what value it will bring. If your only reason for buying is that prices might go up, that’s not investing; you might be looking at a gamble.
A strong portfolio keeps enough cash handy, stays safe, and adds small amounts to higher-risk, high-reward projects. Overexposure to a single asset class and putting it all into one idea could risk everything.
Digital assets are the new frontier and have emerged strongly. A diligent investor will be rewarded for preparedness, or a negligent investor might end up with severe consequences for their distractions.
The question for investors would be which side they want to end up on. Clarity,
discipline, and compliance are what all institutions, family offices, HNIs, or any portfolio builder should look at.
CA Sonu Jain is one of India’s foremost experts on crypto taxation and digital asset regulation. He is the Chief Risk and Compliance Officer of 9Point Capital, a digital wealth platform enabling regulated access to global stocks and crypto ETFs for Indian investors.
