Cryptocurrency adoption has been thriving in India despite the government implementing “discouraging” crypto trading taxes, according to the local community.
India, the biggest global economy in terms of crypto adoption, according to Chainalysis, levied a 30% tax on crypto gains and a 1% tax deducted at source as part of its Union Budget 2022.
More than a year since rolling out the “draconian” taxes in April 2022, India’s crypto community has shown resilience to harsh taxation requirements, with its crypto ecosystem gaining momentum, although not at its full potential, according to local market observers.
India is “one of the most vibrant” crypto markets
India’s current tax structure “can erode profits” and “discourages frequent trading,” ZebPay chief operating officer Raj Karkara said. ZebPay is an India-born crypto exchange that celebrated its 10th anniversary in October.
Despite the hefty tax structure, India’s crypto ecosystem has been “thriving,” Karkara told Cointelegraph, adding that many exchanges have been at the forefront, offering seamless fiat-to-crypto conversion systems that make transactions smooth and accessible.
ZebPay’s chief operating officer, Raj Karkara. Source: ZebPay
Karkara said India continues to be “one of the most vibrant markets for crypto,” driven by a young, tech-savvy population and a surging interest in blockchain solutions.
At least 100 million Indians own crypto
Indian crypto YouTuber Ajay Kashyap agreed with Karkara’s perspective on the Indian crypto market.
“India’s cryptocurrency ecosystem is indeed thriving, despite the challenges posed by the high tax of 30%,” Kashyap told Cointelegraph.
“Indians are extremely tech-savvy, with over half of its citizens under the age of 25,” he said, adding that such a demographic is highly associated with strong engagement with digital assets. This led to an estimated 100 million crypto owners in India in 2024, according to Chainalysis, Kashyap added.
India tops Chainalysis’ 2024 Global Crypto Adoption Index. Source: Chainalysis
“The combination of widespread smartphone usage, cheap internet and a growing interest in blockchain technology has created a fertile ground for cryptocurrency adoption, particularly among younger individuals,” Kashyap said.
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The Indian government has also shown signs of increasing engagement with crypto, he added, referring to the Financial Intelligence Unit’s regulatory approvals of major crypto exchanges like Binance and KuCoin in May.
The full potential of India’s crypto ecosystem remains untapped
India’s crypto ecosystem continues to demonstrate resilience, but its full potential remains untapped, CoinDCX exchange co-founder Sumit Gupta said.
“It’s no surprise that India consistently ranks among the global leaders in crypto adoption, as highlighted in the Chainalysis Global Adoption Index,” he said, adding:
“For it to truly flourish, we need a comprehensive regulatory framework that addresses key issues, including the current taxation structure.”
CoinSwitch business head Balaji Srihari shared a similar observation, highlighting that India’s current tax regime continues to deter broader participation.
“Introducing flexibility in these policies could greatly encourage traders to engage with the market,” Srihari said.
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