Until about a few years ago, investing in cryptocurrency would mean testing the water on a new digital asset, largely driven by FOMO. That doesn’t seem to be the case anymore.
Let’s just take the example of Bitcoin, one of the most popular cryptocurrencies in the world. In 2009-2010, when Bitcoin was invented and mainly used by cryptography fans, with no exchanges or market in existence, its value was practically nothing. Fast forward to 2025, Bitcoin reached an all-time high of $124,400 (over Rs 1 crore) on August 14. Since then, it may have had a bumpy ride, but it seems to be making all the right noises.
Overall, there are about 25,000 other cryptocurrencies in the marketplace, with a market capitalisation estimated at $4.18 trillion (at its peak) in August this year.
Crypto has gone from being a fringe asset to a serious wealth creation tool in just a few years, experts say. “We can dedicate this momentum to multiple factors like the pro-crypto administration in the US, increasing curiosity of Gen Zs and their comfortability and knowledge in exploring tech-driven financial products, Bitcoin’s proven track record of substantial growth year-on-year leaving behind traditional assets like silver, increasing institutional adoption and multiple macro economies coming forward to regulate it as a legitimate wealth asset,” says Ashish Singhal, co-founder of CoinSwitch, a leading Indian crypto trading platform with over 20 million users.
Agrees Edul Patel, CEO of Mudrex, another homegrown crypto exchange and trading app. “With increasing regulatory clarity across the globe, especially with developments in the West, which have given legitimacy to the asset, the demand for cryptocurrency is also growing. This surge in demand has spurred the development of stronger infrastructure and improved accessibility, with multiple platforms simplifying the process for retail and institutional players to enter the market with ETFs,” he adds.
Started in 2018, Mudrex serves a community of over 3 million users, processing nearly $500 million in monthly trading volumes. “New user participation has been growing at about 30% month-on-month, and we’re on track to achieve operational profitability soon,” says Patel.
Global surge
US President Donald Trump—a one-time crypto critic who warned that digital assets were “based on thin air”—has brought about a marked change for the industry in the US. In fact, soon after joining office in January this year, Trump took steps to advance the goal of making the US the ‘crypto capital’ of the world, including signing an executive order to support the US crypto industry and rolling back certain aspects of the erstwhile Joe Biden administration’s crypto regulatory and enforcement policies.
This was followed by a series of other developments, including the signing of a new cryptocurrency law, the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act on July 18, which established regulations and consumer protections for stablecoin, a type of cryptocurrency whose value is linked to a fixed currency or commodity.
These developments in the US have had a massive impact on the global cryptocurrency market. Besides the Bitcoin surging past the $100,000-mark, a growing number of countries are now emulating the US.
Joining the stablecoin race in Asia is Japan, with Tokyo-based startup JPYC preparing to launch the nation’s first yen-pegged stablecoin, a move that could reshape Japan’s role in the global digital currency ecosystem. China, too, is signaling its intentions. The country is reportedly exploring a privately issued yuan stablecoin, even though the official digital yuan (e-CNY) already exists.
Hong Kong, which often acts as China’s testing ground for financial liberalisation, introduced stablecoin regulations on August 1. As per the rules, stablecoins will be pegged to the Hong Kong dollar and fully backed by equivalent reserves.
Meanwhile in March this year, the Pakistani government established the Pakistan Crypto Council (PCC), a new regulatory body for cryptocurrency. Soon thereafter, the council revealed that the country is planning to establish a Bitcoin reserve.
In Bhutan, visitors can now use cryptocurrency to pay for nearly all aspects of their journey, making Bhutan one of the most crypto-accessible destinations in the world. This was after the Bhutanese government announced its partnership with Binance, a leading blockchain ecosystem and cryptocurrency infrastructure provider, in May this year. Since then, Bhutan has witnessed a tenfold increase in crypto-enabled merchants across the country—from just 100 at launch to over 1,000 today. “Bhutan is showing the world how digital finance can enrich travel, simplify transactions, and build stronger connections,” said Richard Teng, CEO of Binance, during his visit to the Himalayan kingdom earlier this year.
Scene in India
Even though India remains a major player in the global crypto space, the current regulatory landscape remains challenging, especially with the heavy taxation regime.
Currently, cryptocurrencies are classified as a virtual digital asset (VDA) under Section 2(47A) of the Income Tax Act. The profits arising from the transfer of cryptocurrencies are taxable at a flat rate of 30%, regardless of the period of holding. Taxability will arise when selling cryptocurrency for Indian rupees, engaging in crypto swaps, or using cryptocurrency to purchase goods or services.
One of the strictest aspects of India’s crypto tax regime is that no deductions are permitted except for the cost of acquisition. “This means that no deduction shall be allowed for transaction fees, trading expenses, storage, or wallet fees,” says Naveen Wadhwa, vice-president of tax and corporate law publisher Taxmann.
Losses from cryptocurrency transactions cannot be set off against any other income, including gains from other crypto assets. “This means if you lose money on one crypto investment, you cannot use that loss to reduce taxes on gains from another crypto,” adds Wadhwa.
Additionally, 1% TDS is deducted on every crypto transaction under Section 194S, if the consideration involved exceeds the threshold (Rs 50,000 for an individual and HUF whose turnover from business does not exceed Rs 1 crore or receipts from profession do not exceed Rs 50 lakh, and Rs 10,000 for others). “Indian crypto exchanges automatically deduct the TDS. For transactions on foreign exchanges or peer-to-peer trades, the buyer is responsible for deducting and filing the TDS,” explains Wadhwa.
The current tax structure makes it tough for everyday users, says Singhal of CoinSwitch. “A flat 30% tax on gains, 1% TDS on every transaction, and no option to offset losses, that is a pretty steep entry barrier, especially for retail investors and active traders. If crypto is to be treated like other asset classes, it needs a more balanced, thoughtful approach that encourages responsible participation,” he adds.
All that is hopefully about to change. India is expected to release the first draft of its cryptocurrency discussion paper soon, a step that could set the tone for the next phase of crypto growth in the country. Naturally, expectations are high from the policy paper that is expected to explore use cases and the benefits of technologies like blockchain and stablecoins.
“It is a very important step forward, building on India’s success during its G20 presidency in 2023, under which we were able to help secure a global consensus on the need to regulate crypto assets responsibly. Since then, most G20 countries have moved ahead with their own regulatory frameworks, and it is encouraging to see India moving in the same direction,” says Singhal of CoinSwitch.
“Consumer protection must be central to any framework, and we are confident the paper will also address the need to ringfence the sector from bad actors and manage risks proactively. At the same time, we hope it will strike the right balance between safeguarding consumers and ensuring that innovation is not held back by overly stringent regulations,” adds Singhal.
As per Patel of Mudrex, the discussion paper will be an important first step to gather diverse perspectives before drafting regulations. “I believe it will explore how to categorise different digital assets, outline possible safeguards, and determine which regulator should oversee which segment. These moves will set the precedent for responsible adoption and growth of crypto in India, creating a more structured and investor-friendly ecosystem,” he offers.
Not without its demerits
In just the first half of this year, over $2 billion in cryptocurrency was stolen by hackers, according to the blockchain security firm Chainalysis. Most of it came from the $1.5 billion stolen from Dubai-based crypto platform Bybit in February by hackers connected to North Korea. Chainalysis estimates that up to $4 billion worth of cryptocurrency may be stolen by the end of the year.
Closer home, in July, Indian crypto exchange CoinDCX encountered a massive hack leading to the loss of $44 million, as per reports. Even though CoinDCX clarified that customers’ funds are 100% safe, the exchange reportedly received a huge number of withdrawal requests soon after the news spread in the market.
The CoinDCX incident came almost a year after another homegrown crypto exchange WazirX lost $234.9 million to a cyberattack in July 2024. The said amount of crypto assets were taken out of the exchange and sent to a new address by North Korean hackers belonging to the Lazarus Group, as per reports.
However, last month, WazirX shared that around 95% of its users have revoted in favour of its restructuring plan as per an amended scheme proposed by its parent Zettai Pte.
Cryptocurrency has also often come under the scanner for being used for money laundering and other offences like fraud and drug trafficking. Taking note of this, the Supreme Court in March this year said that trading in Bitcoin in India is like “dealing with a refined way of hawala business”, as it lamented that the Centre has till now not come out with a clear regime on regulating virtual currency. The remarks were made while dealing with a bail application of an individual who was arrested by the police for an alleged illegal Bitcoin trade.
However, industry experts believe that these incidents should not shake the faith of investors in cryptocurrency. “When we look at the bigger picture, the majority of illicit activities are still taking place using fiat currencies. The illegal activities done through crypto are gaining attention because of the traceability that blockchain provides. In that sense, crypto is one of the most effective ways to identify illicit activities and eliminate bad actors from the financial markets,” says Patel of Mudrex.
Crypto exchanges fully recognise the concerns around the risks associated with virtual digital assets, including the possibility of misuse for unlawful activities. “These are genuine issues that must be addressed through regulations and responsible industry practices,” says Singhal of CoinSwitch.
According to him, India has already taken an important step in this direction by designating virtual digital asset service providers (VDASPs) as reporting entities under the Financial Intelligence Unit–India (FIU-IND) in 2023. “This brings VDASPs within the purview of the Prevention of Money Laundering Act (PMLA). Reporting entities, including CoinSwitch, are required to monitor transactions closely, maintain detailed records, and promptly report any suspicious activity to FIU-IND through Suspicious Transaction Reports (STRs). This helps ensure that any potential misuse is flagged early and dealt with as per the law, reinforcing trust and transparency within the ecosystem,” adds Singhal, whose platform saw a 2.5x jump in user registrations between January and December 2024, with trading volumes surging by 6.5x. It offers over 350 coins and over 500 crypto futures contracts.
Going forward
Two of the biggest challenges that crypto platforms face in India are regulatory clarity and investor education. “On the regulatory front, while there have been positive signals in terms of dialogue, the absence of a clear, comprehensive framework creates uncertainty for platforms and investors alike. This impacts everything from innovation to long-term planning,” says Patel of Mudrex.
The second challenge is education. “A large section of Indian investors still view crypto purely as a quick-profit tool, often driven by hype cycles. There’s limited awareness about its underlying technology, long-term utility, and risk management. Without strong educational efforts, this perception gap can hinder sustainable adoption,” says Patel of Mudrex.
Agrees Singhal of CoinSwitch. “For a lot of Indians, crypto still feels complicated and rightly so. That is why, over the years we have doubled down on simplifying the experience whether it is our app design, building with compliance at the core, or creating content that educates rather than just sells. Our aim is to help users make confident, informed decisions, not chase hype or act on impulse,” he offers.
Singhal says he is already seeing a real shift—users are moving from FOMO-driven trading to long-term planning. They are asking better questions, doing more research, and seeing crypto as one part of a diversified financial strategy. “As the ecosystem matures, we believe India will play a leading role in the global crypto story as it has all the talent and potential to do so,” he adds.
We hope that the new policy paper will strike the right balance between safeguarding consumers and ensuring that innovation is not held back by overly stringent regulations — Ashish Singhal, co-founder, CoinSwitch.
The discussion paper will be an important first step to gather diverse perspectives before drafting regulations. It will set the precedent for responsible adoption and growth of crypto in India — Edul Patel, CEO, Mudrex.