Tax Rules Trump Regulations as India's Crypto Market Shifts
India's cryptocurrency market is expected to undergo significant changes in the next year due to tax rules rather than new regulations, 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 many users to move their trading to offshore platforms.
Menon stated that Indian authorities are increasing oversight of crypto companies, with the Financial Intelligence Unit-India (FIU-IND) issuing notices to 15 crypto service providers over alleged failures to follow anti-money laundering rules. Despite these restrictions, India remains one of the world's biggest crypto markets, ranking first in Chainalysis' 2025 Global Crypto Adoption Index.
Meno warned that Indian crypto investors will react cautiously if US inflation comes in higher than expected and causes global markets to fall, pointing to a 10% drop in Bitcoin on September 13, 2022. He advised investors to pay attention to what happens after the initial fall, as the recovery may be stronger or less meaningful depending on market conditions.
Menon also emphasized the importance of using derivatives to manage short-term risk and diversify portfolios. He noted that traders should watch open interest and spot trading activity before major economic events, such as US inflation reports or Federal Reserve decisions, as high leverage can lead to large price swings.