India’s crypto – Indian crypto activity may look quieter at local exchanges, but the numbers in the report tell a different story: adoption stays among the world’s highest while taxes and enforcement pressures push trading and builders offshore. The market is maturing into sta
The silence people talk about in India’s crypto market has a very specific sound: fewer bids on local order books, fewer names in the daily hype cycle, more users appearing to “go dark” by moving to offshore platforms.
But the data in this report doesn’t describe a fading industry. It describes a market being redirected—away from where it was once most visible, and into a different kind of growth.
During the bull market from 2020 to 2021, retail investors poured in and the industry expanded fast. Decentralized finance (DeFi), non-fungible tokens (NFTs), and the developer ecosystem grew alongside altcoin rallies. In that stretch, India became a core player in global crypto activity. The report cites Chainalysis data showing that from July 2020 to June 2021, the scale of the Indian crypto market surged by 641%. Among transactions initiated by Indian addresses, DeFi-related transactions accounted for 59%, higher than in Vietnam and Pakistan. Institutional-level large trades exceeding $10 million made up 42% of total trading volume—an indicator. in the report’s telling. that India had moved beyond pure retail speculation.
It was visible too in the growth of major local exchanges and funding milestones. WazirX surpassed 10 million users in 2021, with new registrations from small towns and suburban areas rising by 700% year-on-year. CoinSwitch Kuber secured $260 million in funding led by a16z and Coinbase Ventures, reaching unicorn status. CoinDCX also became a unicorn in 2021.
And India didn’t just consume crypto technology—it helped build it. Polygon. created by Indian entrepreneurs (founded as Matic Network in 2017). rose into prominence as a scalability infrastructure within the Ethereum ecosystem. After Polygon. the report lists a wave of protocols and companies founded by Indian teams or led by Indian founders. including EigenLayer. Avail. Sentient. Stader Labs. Biconomy. OpenFX. FalconX. and Instadapp.
Then 2022 arrived.
The report frames 2022 as a watershed year—when rules tightened as global markets slid into a bear phase. India introduced a 30% income tax on profits from virtual digital asset (VDA) transactions. In July 2022. it introduced a 1% tax deducted at source (TDS). and the report says that this severely impacted activity on local exchanges.
A survey by the Indian policy think tank Esya Centre is used to explain what happened next: after the introduction of the 1% withholding tax. many Indian users shifted to offshore platforms that are harder to regulate. From July 2022 to July 2023, the report says over 90% of crypto asset transactions by Indian investors moved to overseas exchanges.
Regulatory pressure didn’t stop there. By 2025, the report says India’s tax authorities intensified crypto tax audits. The Central Board of Direct Taxes (CBDT) issued audit notices to 44. 057 taxpayers involved in crypto trading who had not reported their assets in the VDA section of their income tax returns.
That is the central contradiction running through the whole piece: the market may appear less busy inside India’s most regulated storefronts, but adoption and demand haven’t disappeared.
Chainalysis data is presented as direct counterevidence. The report says India topped the Global Crypto Adoption Index for three consecutive years—from 2023 to 2025. It adds that the ranking is based on four dimensions: trading on centralized exchanges. retail investment. DeFi on-chain transfers. and large institutional centralized trades. The report also points out a methodological nuance: the index uses purchasing power parity GDP per capita and population size as correction factors. which the report says means readers should distinguish between absolute trading volume and per-capita penetration rates when assessing market size.
Still, even with the caveat, the direction is hard to dismiss in the report’s view: activity is being sustained, just not necessarily where people were used to seeing it.
The report also describes a shift in what India’s crypto market is becoming. It argues that the industry is moving away from being dominated purely by trading and speculation. and gradually expanding toward developers. startups. underlying infrastructure. and real-world payment applications. Financing for Series B and later rounds is described as warming up again. India is presented as a global hub for Web3 developers, housing about 15.2% of the world’s Web3 development talent.
But another risk is given equal weight. The report says the industrial value created by local developers and startup teams may not remain in India. It claims that many projects choose to register in overseas jurisdictions to find regulatory certainty and more favorable investment structures.
This is where the “quiet” narrative breaks down most sharply in the report: users may move offshore under tax and compliance pressure, and founders may do the same when the business environment becomes unpredictable or expensive.
A key section of the report focuses on demand for stablecoins—described as one of India’s strongest growth pillars, and also the most sensitive regulatory area. The report says stablecoins are likely to support growth in three areas: stablecoins, cross-border remittances, and asset tokenization.
In the report’s telling. stablecoins make practical sense in a country where millions of families and workers regularly make cross-border remittances. It says stablecoins can provide faster settlement speeds. easier access to dollar-pegged value. and reduce friction for users who face high fees. slow bank transfers. or difficulties obtaining traditional dollar accounts.
At the same time. the Reserve Bank of India (RBI) is described as maintaining a cautious stance toward private stablecoins. driven by concerns about monetary sovereignty. financial stability. and cross-border capital controls. The report says India’s official digital payment infrastructure—built around central bank digital currencies (CBDC) and the Unified Payments Interface (UPI)—is prioritized. creating a situation where there is strong demand for private stablecoins but their regulatory positioning inside the domestic financial system remains unresolved.
The RBI concerns are quoted through the report’s summary of statements and policy direction. including the claim that RBI Deputy Governor T. Rabi Sankar publicly stated in 2025 that stablecoins can enable illegal cross-border payments. circumvent capital controls. impact domestic monetary policy. weaken the banking intermediary system. and threaten financial stability.
The report also sets up another sharp point: even as stablecoins appear most valuable for cross-border use. India already has UPI—described as an instant. free. deeply integrated payment network widely used by consumers and merchants. That is used to argue that stablecoins may have more realistic prospects in cross-border scenarios than as everyday domestic payment tools.
Derivatives are another place where the report insists the market isn’t fading—it’s expanding. It cites Pi42 data showing that from 2024 to 2025. the proportion of users aged 18 to 25 among new users in India’s crypto derivatives market rose from 24% to 61%. It says trading volume in eastern India increased sixfold, while northeastern and central regions each saw a fourfold increase. The report attributes this penetration beyond major cities like Mumbai. Bangalore. and Delhi in part to the proliferation of local-language crypto media on YouTube in Hindi. Tamil. Telugu. and Bengali.
It also says the average transaction amount per trade rose from $1,051 in 2024 to nearly $1,960 in 2025. The proportion of high-frequency daily traders increased from 45% to 60%. It calls that shift evidence that Indian users are moving beyond merely holding coins toward active trading.
Even where spot trading is concerned. the report says activity is returning—though not necessarily to the same distribution of risk and regulation. It cites CoinSwitch data that in 2025. India’s spot trading volume of mainstream cryptocurrencies surged by 114% year-on-year. with new traders increasing by 27%. It says 18 to 25-year-olds contributed half of the trading volume, with 37.6% of active traders in that group and 37.3% aged 26 to 35.
Financing and developer ecosystems are presented as the longer-term proof that the industry is evolving rather than disappearing.
The report points to maturity in funding: it says the hallmark of maturation is a growing number of local startups entering later stages of B-round financing and beyond. It argues that while total fundraising has declined compared to the frenzy of 2021 to 2022. the number of financing rounds for mature projects in Series B and later stages has increased.
It lists benchmark companies either locally established or led by Indian founders. Aspora. a cross-border financial app for overseas users of Indian descent. initially relied on stablecoin links for Indian remittance services and secured B-round funding led by Sequoia. Greylock. and Y Combinator in 2025. It is described as expanding into bill payments, wealth management, savings, and credit. Tazapay is described as a B2B cross-border payment infrastructure provider founded by Rahul Shinghal. Saroj Mishra. and Arul Kumaravel. receiving B-round investment from Circle Ventures. CMT Digital. and Coinbase Ventures in 2026. while building stablecoin deposit and withdrawal infrastructure and fiat-to-stablecoin conversion.
The report also references CoinSwitch. which completed C-round financing with participation from a16z. Paradigm. and Ribbit Capital in 2021. and CoinDCX. which received D-round financing from Antera Capital. Steadview. and Coinbase Ventures in 2022. It notes EigenLabs. founded by University of Washington professor Sreeram Kannan. completing B-round fundraising from a16z crypto in February 2024. with three core products: EigenLayer. EigenDA. and EigenCompute. It includes SuperGaming. which secured B-round funding from Steadview. Bandai Namco. and a16z Speedrun in 2025 as it transitions from traditional mobile games into the Web3 crypto space.
There is also FalconX, a U.S. institutional crypto prime broker founded by Raghu Yarlagadda and Prabhakar Reddy, which landed D-round financing in 2022.
Beyond those, the report mentions the Web3 gaming project KGeN, which has raised a total of $43 million, and the crypto AI project Sentient, which secured $85 million in its first seed financing round.
Developers are treated as the real leading indicator in the report. It says India’s share of global Web3 developers is 15.2%, up from 12% in 2024, ranking second only to the United States. It cites the Electric Capital 2024 Developer Geography Report, with U.S. developers at 19%. India at 12%. and the UK at 4%. adding that only India’s developer share has significantly increased while the U.S. share has declined year by year.
Geographically. the report says Bangalore leads with 23.6% of developers. followed by the Delhi capital region at 11.8%. Mumbai at 6.4%. Pune at 3.4%. and Hyderabad at 3.2%. It says Bangalore’s advantage is built on India’s traditional IT industry. reinforced by hackathons and talent incubation projects from communities like Solana’s Superteam and Ethfolio.
The report describes the developer base as youthful. In a developer survey conducted by Hashed Emergent and Devfolio. it says 82.2% of respondents are aged between 18 and 25. with about 70% being students. It also says 42.6% of Indian Web3 developers have more than two years of experience. 33.2% have one to two years of experience. and 24.2% are novice developers with less than a year of experience.
Cross-border collaboration is also said to be rising. It claims that among Indian developers with less than a year in the industry, 18.9% participate in multinational remote teams. Among those with over two years of experience, it says cross-border collaboration jumps to 55.4%.
All of this is used to support the report’s insistence that India’s crypto market hasn’t actually “gone quiet.” It is still building capacity.
Yet capacity doesn’t automatically become domestic industry, and the report returns to this point with a detailed list of how value can leak out.
The report describes an internal paradox: India has the world’s second-largest Web3 developer community. but the industrial value created by local talent is difficult to retain domestically. It says many developers work for overseas protocols or projects registered offshore. and many Indian founders register projects in places such as Singapore. Dubai. the British Virgin Islands. or Delaware in the United States.
It is explicit about which companies show up in that pattern—EigenLabs, Avail, Biconomy, Instadapp, and FalconX are cited as having organizational structures not based in India, while CoinSwitch and CoinDCX are described as rooted in the domestic market.
The report ties offshore registration to practical barriers: high registration costs for Indian crypto companies. difficulties opening bank accounts. unclear regulatory rules. high personal income tax on equity incentives. and the convenience of offshore dollar financing. The result. it says. is a repeated outcome: India exports developer talent. while project equity. intellectual property. and long-term tax sources flow abroad.
That connects directly back to the opening contradiction: if local users and founders keep getting nudged—by taxes, uncertainty, and compliance costs—then the “quiet” isn’t the absence of demand. It’s the relocation of where demand and business most easily fit.
There is also an account of why the rules feel structurally stuck.
The report describes regulatory oversight as lacking comprehensive cryptocurrency legislation and a dedicated regulatory body. It says the market relies mainly on tax rules and anti-money laundering requirements. It adds that it remains unclear how stablecoins, token issuance, and tokenized assets are handled within virtual digital assets (VDAs).
It also recalls a timeline of major disruptions. The RBI issued a ban in 2018 prohibiting banks from providing services to crypto companies. which was declared unreasonable and overturned by the Supreme Court of India in 2020. After that, it says Congress made multiple attempts to legislate but failed to pass a crypto ban bill.
The report portrays the current regulatory approach as a compromise: managing an industry difficult to eliminate through tax and anti-money laundering rules rather than detailed product-specific licensing. It says regulatory audits will continue to escalate in 2024-2025. with regulators using big data to trace crypto-related tax evasion. penalizing non-compliant platforms and raising costs for compliant users and local platforms—pushing funds out of the formal market.
It turns from the overall framework to specific bottlenecks starting with taxation.
Profits from VDA asset transactions are described as subject to a 30% income tax, with an additional 1% TDS on qualifying transactions. The report says the TDS rate affects short-term. high-frequency traders because 1% is deducted from each transaction immediately. while traders must wait until tax season to apply for refunds—freezing capital for extended periods. It adds that high-frequency traders see their principal repeatedly deducted each month. reducing capital utilization and making high-turnover trading commercially unfeasible.
The report ties this to user outflow again, using Esya Centre research to say that after the introduction of the 1% TDS, 3 to 5 million Indian users shifted to overseas platforms. It says from July 2022 to July 2023, the trading volume of Indian users on offshore platforms exceeded $42 billion.
It also provides an estimate: only 9.02% of the crypto assets held by Indian investors remain on compliant local platforms. It says that if the TDS rate were reduced to 0.01%, it could guide trading back to local markets and potentially increase overall tax revenue.
On regulation, it centers anti-money laundering as an entry barrier. It says that starting in March 2023. local virtual asset service providers had to register with the Financial Intelligence Unit of India (FIU-IND) and meet compliance obligations such as customer due diligence. reporting suspicious transactions. appointing anti-money laundering personnel. establishing internal controls. and adhering to travel rules.
The report says the FIU strengthened its role. In October 2025, it issued violation notices under the Anti-Money Laundering Act to 25 overseas exchanges including Huione, CEX.IO, and BingX. It says that in 2024, Binance was fined 188.2 million rupees (approximately $2.25 million) for failing to complete FIU registration. It adds that the FIU pushed the Ministry of Industry and Information Technology to ban non-compliant overseas platforms.
It also says compliance registration has been a route for overseas firms to return to India. In March 2025. it says Coinbase completed FIU registration and obtained qualifications for compliant operations in India. and it states that Indian crypto service providers must register with the FIU and fulfill anti-money laundering obligations.
From the report’s viewpoint, this still leaves product-specific gaps—especially for DeFi protocols, non-custodial wallets, and decentralized applications where the question of who carries anti-money laundering obligations remains unresolved.
Tokenization is described as another big opportunity that collides with unclear legal frameworks. The report says global institutions are accelerating on-chain pilots for assets such as bonds. funds. real estate. bank deposits. and carbon credits. and that India is exploring through the International Financial Services Centres Authority (IFSCA) sandbox. the Finternet project. and capital market tokenization pilots. Yet it says India lacks specific token legislation, so implementation faces obstacles due to overlapping application of traditional financial regulations.
It cites an IFSCA 2025 consultation document on asset tokenization. saying the document does not constrain central bank digital currencies. general cryptocurrencies. or NFTs. It says it seeks rules for asset tokenization covering categories. issuance structures. asset custody. trading and settlement. investor rights. and risk control dimensions. It describes that as indirectly confirming the long-term value of tokenization while acknowledging that supporting regulations remain in research and exploration.
The report lists technical and legal complications: how tokens represent ownership of real assets. whether token transfers count as legal ownership transfers. how token holders’ rights are protected if a custodian goes bankrupt. how foreign exchange controls apply with foreign investors. and how profits from token trading are treated under tax law.
The story closes by returning to the same theme: India’s crypto market isn’t absent. It is changing form. The report says indicators shift from retail trading and altcoin bubbles toward multidimensional adoption—India ranking first in the Global Crypto Adoption Index. annual on-chain inflows reaching $338 billion. derivatives transaction amounts nearly doubling in 2025. mature B-round financing returning. and Web3 pilots progressing.
It also insists that the existing shortcomings aren’t driven by a lack of demand. Instead, it argues the pain points are in the supporting systems not keeping pace with market size.
Taxes are pushing capital into offshore and gray markets. Anti-money laundering rules enforce baseline compliance while product-specific rules remain vague. Demand for stablecoins is clear, but the central bank prioritizes CBDCs. Asset tokenization has broad potential, but property rights and supporting legislation are still missing.
The report’s final question isn’t whether India has “gone quiet.” It’s whether India can adjust the rules fast enough for the market’s demand and builder talent to translate into domestic infrastructure—rather than continuing to move, piece by piece, to places where certainty is easier to find.
India crypto market Chainalysis Global Crypto Adoption Index FIU-IND CBDT crypto audits stablecoins in India RBI stance on private stablecoins UPI TDS on crypto offshore exchanges Web3 developers India