Tax Rules Trump Regulation as India's Crypto Market Faces Uncertainty

India's crypto market is facing significant challenges due to tax rules, according to Rajagopal Menon, Vice President of WazirX. The country's 30% tax on crypto gains and 1% Tax Deducted at Source (TDS) have already led to a shift in trading behavior, with many users moving to offshore platforms.

The Financial Intelligence Unit-India (FIU-IND) issued notices to 15 crypto service providers on September 9, citing alleged failures to follow anti-money laundering rules. The authorities also ordered steps to remove their apps and websites from public access.

Despite these restrictions, India remains a major player in the global crypto market, ranking first in Chainalysis' 2025 Global Crypto Adoption Index. However, tax and AML enforcement measures pose short-term headwinds for onshore adoption, token launches, and fundraising.