India's crypto market in 2025: Adoption grows while regulations stay vague

As digital assets continue to operate in a tightly regulated environment, the sector, analysts said, has displayed significant resilience, innovation, and growing integration into the broader system

India’s cryptocurrency ecosystem in 2025 presents a mixed but optimistic picture. As digital assets continue to operate in a tightly regulated environment, the sector, analysts said, has displayed significant resilience, innovation, and growing integration into the broader financial system.

 

Among the notable developments in 2025, analysts pointed to two key milestones. First, India reasserted its position as the world’s largest market for crypto adoption. Second, there was a noticeable tightening of regulatory enforcement, with the Financial Intelligence Unit (FIU) leading actions against non-compliant offshore platforms. These developments, analysts said, suggest a future shaped by structured, regulated participation in the digital asset market.

 

Wider adoption, strengthened compliance

"What’s striking is the widening adoption beyond major cities, with increased engagement from Tier-2, Tier-3, and Tier-4 regions. On the regulatory front, the strengthening of compliance frameworks, such as stricter KYC/AML standards and expanded reporting requirements, has enhanced trust and aligned the domestic ecosystem closer to global norms," said Raj Karkara, COO, ZebPay.

 

At the same time, India's product and developer landscape has gained notable momentum, with Indian startups and developers making a strong mark in decentralised finance (DeFi), gaming, infrastructure protocols, and global blockchain projects. The country also saw a strong presence at global blockchain events and continued progress in Web3-related initiatives. 

 

"A significant policy milestone was India’s move toward adopting the OECD Crypto-Asset Reporting Framework (CARF), slated for implementation from April 1, 2027. We also saw meaningful progress in tokenisation, notably with the RBI piloting tokenised certificates of deposit," Karkara added.

 

Meanwhile, a notable shift came in the form of increased VASP (Virtual Asset Service Provider) registrations with the FIU-IND, signaling a move toward compliance-led operations and greater regulatory legitimacy. According to Vikas Gupta, country manager, India at Bybit, this shift creates a more structured environment for digital asset players.  ALSO READ | India joins global crypto elite, ranks among top 10 in transactional use

Taxation remains a concern

While India has yet to introduce a standalone crypto law, policymakers have taken incremental steps to integrate digital assets into existing financial and tax frameworks. However, the 30 per cent tax on crypto gains, coupled with the 1 per cent Tax Deducted at Source (TDS), they noted, continues to shape investor behavior in 2025. While authorities argue that the tax regime promotes transparency and traceability, industry players contend that it suppresses trading volumes and drives activity offshore.

 

"India’s crypto tax regime has undoubtedly altered market behavior. The 1 per cent TDS has reduced high-frequency trading, compressing visible onshore volumes and pushing investors toward fewer, longer-term positions. Regulated exchanges have consistently argued that rationalising these taxes would deepen participation and, over time, enable the government to raise revenue from a broader, more sustainable tax base," said Vikram Subburaj, CEO of Giottus.

Call for clearer regulations

One of the most closely monitored aspects of India’s crypto market in 2025, analysts said, has been regulation. At present, India’s regulatory framework, they said, signals containment rather than clarity.

 

“While compliance, taxation, and enforcement mechanisms are firmly in place, the absence of a comprehensive law and a dedicated regulatory body like the Reserve Bank of India (RBI) or Securities and Exchange Board of India (Sebi) leaves the sector operating within defined guardrails, rather than under a clearly articulated long-term vision,” said Subburaj.

 

At the Business Standard BFSI Insight Summit 2025 in Mumbai earlier this year, top crypto industry leaders echoed a pressing concern: the Indian government must bring clear regulations to the digital asset sector. Policy delays, they warned, threaten to push innovation and talent out of India. 

Looking ahead to 2026

Analysts remain broadly optimistic about the outlook for India’s crypto market in 2026, citing regulatory progress and global market stability as factors creating a more supportive environment for growth. Adoption continues to expand beyond major metros, and with stronger compliance standards and movement toward frameworks like CARF, market trust is expected to further solidify.

 

"As institutional participation continues to grow globally and tokenisation gains traction, we anticipate more capital flowing into regulated digital asset products. Improved liquidity across core assets and the continued emergence of tokenised financial instruments should help crypto integrate more meaningfully with mainstream finance," said Karkara.

 

Subburaj of Giottus, on the other hand, believes India’s crypto market is poised for measured expansion over the next 12 months, as regulatory clarity solidifies and global cues influence capital flows.

 

"Bitcoin’s consolidation near $90,000 and cumulative ETF inflows of $60+ billion reflect a maturation beyond mere hype. The global crypto market capitalisation is hovering above $2 trillion, and BTC will trade as a macro-linked asset. Indian participation is sure to deepen on compliant platforms. This will gain further momentum as the government has indicated that clearer policy frameworks are on the horizon," said Subburaj.

Crypto awaits a bright future in India

As the regulatory frameworks evolve, analysts predict that growth will be led by compliance-first platforms that prioritise transparency, governance, and investor protection. Gupta expects stronger participation from institutions and enterprises, particularly in blockchain-led use cases such as payments, supply chains, tokenisation, and digital infrastructure.

 

"Importantly, even if trading volumes grow at a measured pace, India remains well-positioned to emerge as a major global hub for Web3 talent and innovation. With a strong developer base, entrepreneurial ecosystem, and growing enterprise interest, India’s long-term crypto and blockchain potential extends far beyond short-term trading cycles," said Gupta.