India has one of the world’s largest crypto user bases — estimated at 75-100 million users — despite having one of the most hostile regulatory environments. The Indian government has oscillated between attempting to ban crypto entirely and taxing it into submission, creating a confusing landscape where millions trade daily in a legal grey zone.
The saga began dramatically in 2018 when the Reserve Bank of India (RBI) banned banks from servicing crypto businesses. Indian exchanges like WazirX (founded by Nischal Shetty), CoinDCX, and ZebPay were cut off from the banking system. The ban was overturned by India’s Supreme Court in March 2020 in a landmark decision, temporarily reviving the industry.
Then came the taxes. In 2022, India introduced a 30% tax on crypto gains with no offset for losses, plus a 1% TDS (Tax Deducted at Source) on every transaction. The TDS provision was devastating — it meant 1% of every trade was withheld by the exchange, making frequent trading economically unviable. Trading volumes on Indian exchanges crashed 90%+ as users migrated to international platforms like Binance (which India later banned) and OKX.
India’s relationship with crypto reflects a broader tension: a young, tech-savvy population eager to participate in global financial innovation, governed by institutions that view crypto as a threat to monetary sovereignty and a vehicle for capital flight. India’s UPI payment system — which processes billions of transactions monthly — is often cited by crypto skeptics as evidence that India doesn’t need crypto. But UPI doesn’t offer what crypto offers: permissionless global transfers, DeFi yields, and exposure to global digital assets. Until India finds a coherent regulatory framework, its crypto ecosystem will continue operating in the shadows of its own potential.
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