India: 100 Million Crypto Users Challenge Repressive Taxes

Crypto traders in India operate in a climate of constant uncertainty. At times, the government promises a regulation paving the way for a stable legal framework, while at other times it raises the threat of a crackdown on bitcoin and other crypto-assets. This instability keeps crypto users on edge. However, despite taxes considered discouraging, India shows impressive crypto adoption, driven by its youth and technological advancements.

India and its youth: engine of a dynamic crypto market

With over 100 million holders of crypto-assets, India, known for its crypto leadership, is a true global locomotive in terms of digital asset adoption. This momentum relies on a young and connected population: more than half of Indians are under 25 years old.

Raj Karkara, COO of ZebPay, explains that “India is one of the most vibrant crypto markets in the world“, thanks to an ecosystem blending blockchain innovations and suitable exchange infrastructures.

Crypto just became legal in India, with a 30% tax on income from sale of digital assets https://t.co/u0qmwJpMd9 #Budget2022 pic.twitter.com/zClfT7G0rT

— Bloomberg (@business) February 1, 2022

Despite a 30% levy on crypto gains and a 1% withholding tax, trading continues to grow. Ajay Kashyap, an influential YouTuber on cryptos, highlights:

• A strong penetration of smartphones;
• A low-cost internet access;
• A marked enthusiasm for blockchain solutions.

All these elements create a fertile ground for crypto users. Nevertheless, these heavy taxes hinder the frequency of transactions, reducing profits for traders.

Towards a more complete crypto adoption: the role of regulations

While India leads in crypto adoption according to the Chainalysis ranking, its full potential remains untapped. Sumit Gupta, co-founder of the CoinDCX exchange, asserts that a clear and adaptable regulatory framework would be a crucial key for development. Adoption could further widen if the government eased its current tax regime, according to Balaji Srihari of CoinSwitch.

Our 2024 Global Crypto Adoption Index is here! The top 10 countries spanned 5 continents, but Central & Southern Asia and Oceania (CSAO) dominated the list. Read on to see the top 20 countries and learn about global adoption trends: https://t.co/F2nqkELtd2 pic.twitter.com/bbuG1lQ8vB

— Chainalysis (@chainalysis) September 11, 2024

However, India has made some progress by stating it is ready to reopen its doors to offshore exchanges. Last May, giants like Binance and KuCoin received regulatory recognition. However, more flexible regulation could transform India into a global crypto hub, attracting more investors and talent. In short, the momentum is there, but administrative hurdles slow its growth.

Thus, while India positions itself as a champion of CBDCs and gold, Bernstein advocates for a strategic diversification by integrating Bitcoin. This choice could strengthen its financial future against economic and technological uncertainties.