India’s Crypto Moment: An Explainer on Regulation, Risk and the $1.1 Trillion Question
India’s crypto story in 2025 is a paradox. It is the world’s largest market by users, yet one of the most tightly constrained by regulation. As 119 million Indians trade, hold, and experiment with digital assets, policymakers prepare a decisive reset. With full-fledged crypto regulations expected in 2026, the question is no longer if India will regulate crypto, but how hard and how fast.
How big did India’s crypto market become in 2025?
Massive. According to Chainalysis, India ranked No. 1 on the Global Crypto Adoption Index, accounting for over one-fifth of global crypto holders. On-chain transaction volumes hit $2.36 trillion between July 2024 and June 2025, growing 69% year-on-year. India is now the largest crypto user base in the world—by scale, not speculation.
How did regulation shape crypto growth in 2025?
India’s crypto growth came within constraints, not outside them. Rather than banning crypto outright, regulators enforced compliance through registration, surveillance, and taxation. This structured—but restrictive—framework helped weed out fly-by-night operators while allowing serious platforms to scale. Exchanges adapted. Investors stayed. The market matured.
What is India’s current regulatory approach to crypto?
India follows a multi-agency oversight model. The Reserve Bank of India maintains that crypto is not legal tender, while actively developing the Digital Rupee. The Financial Intelligence Unit–India (FIU-IND) enforces KYC and AML compliance under the Prevention of Money Laundering Act. Domestic exchanges are required to register, report transactions, and monitor risk. The message is clear: crypto is tolerated but watched closely.
How does crypto taxation work in India?
India has one of the world’s strictest crypto tax regimes. There is 30% flat tax on gains under Section 115BBH, 1% TDS on annual transactions exceeding ₹50,000, and no loss set-offs or indexation benefits. Many investors responded by holding assets longer and shifting from speculative trading to wealth preservation.
Which parts of India are driving crypto adoption?
Not metros but Bharat. Over 75% of crypto activity now comes from tier II, III and IV towns and cities. While Lucknow saw 5x growth in Ethereum trading, Pune quadrupled Solana volumes, and Jaipur doubled Ethereum activity. Crypto adoption has gone truly pan-India.
Who are India’s crypto investors today?
Young, distributed, and increasingly diverse. Around 45% are in the 26–35 age bracket, 25.3% fall in 18–25 bucket, and 12% are women investors. Bitcoin reclaimed the top spot by investment share, while Ripple and Solana saw renewed traction.
Did security breaches hurt confidence in 2025?
They tested it but didn’t break it. Following the WazirX hack in 2024, exchanges tightened security. When CoinDCX faced a breach in July 2025, customer assets remained safe. Losses were absorbed by the exchange, not users. The response marked a shift: faster disclosure, stronger safeguards, and higher accountability.
How did investors adapt to tighter rules?
By getting smarter. The tax regime discouraged frequent churn and encouraged long-term thinking. Surveys suggest 90% of informed investors would increase exposure if regulations became clearer, signalling significant pent-up demand. Crypto didn’t disappear. It consolidated.
What regulations are expected in 2026?
All signs point to a comprehensive digital assets framework, including a discussion paper on crypto assets, possible creation of a Crypto Assets Regulatory Authority under the proposed COINS Act, expansion of Digital Rupee pilots, and regulatory sandboxes for DeFi and institutional participation.
How does India compare globally on crypto regulation?
India mirrors a global trend: regulate, don’t rush. Unlike blanket bans or free-for-alls, India’s coordinated oversight model allows different regulators to manage risk, innovation, and investor protection simultaneously. Whether this balance proves optimal will become clear only after 2026.
What is at stake for India’s crypto market?
A lot. With 119 million users already onboard and infrastructure largely in place, effective regulation could unlock a $1.1 trillion opportunity by 2032. Poorly designed rules could just as easily push innovation offshore. India’s crypto future now hinges less on adoption—and more on policy execution.
(yMedia is the content partner for this story)