When I first entered the world of crypto trading in India, I quickly realized that the real challenge wasn’t price swings; it was regulatory uncertainty. In my opinion, being a small retail trader, the excitement of buying Bitcoin or trying out altcoins often gets mixed with unease: confusing tax rules, changing compliance requirements, and the constant doubt of whether crypto in India is actually recognized or still stuck in a grey area.
Globally, cryptocurrency adoption has evolved from a niche interest to a mainstream asset class. But India still lacks an appropriate legal regulatory framework.
The Double-Edged Sword of India’s Crypto Adoption
According to the 2025 Global Crypto Adoption Index by Chainalysis, India and the United States now jointly lead the world in grassroots crypto adoption. Despite this where in a traditional equity market SEBI provides clear oversight, crypto trading in feels like walking into a puzzle. Traders keep following crypto news either on X or youtube from different influencers and KOLs to understand whats happening.
Every budget session or court case raises the question: Is crypto a commodity, an asset, or scam?
The Tax Puzzle
The 30% Flat Tax and Its Ripple Effects
When the Indian government announced a 30% flat tax on crypto gains in 2022, many retail traders like me took it as an indirect signal: “Speculations are allowed, but discouraged.”
For me, who hardly makes ₹15K -20K profit in a year, losing nearly a third to tax, with no provision to offset losses, feels more like punishment than regulation!
The 1% TDS Challenge
The introduction of 1% TDS on each crypto trade was another blow. For high-frequency traders, it became a direct liquidity drain.
On centralized exchanges (CEXs), TDS is automatically deducted, but on-chain decentralized exchanges (DEXs) and peer-to-peer trades often bypass this system. This makes the rules uneven, people using centralized exchanges get taxed automatically, while many on-chain trades on DEXs slip through without being tracked.
Compliance Without Clarity:
FIU issues notices to 25 offshore crypto platforms for PMLA non-compliance. On paper, this looked progressive, aligning India with global norms.
Intraday traders like me felt that compliance was no longer optional. We couldn’t just think of exchanges as black boxes anymore; they now had to play by the same rules as financial institutions. We had to count on them registering, safeguarding us from legal exposure, and ensuring that our trades were traceable (in case we ever needed a defense).
In the context of retail adoption, this moment is pivotal. It marks a boundary between a “Wild West” era of crypto in India and a future where regulations, though imperfect, begin to shape incentives, trust, and safer participation.
What I Understand About the Global Crypto Landscape
Singapore’s Balanced Approach
Under the Payment Services Act (PSA) 2019, cryptocurrencies are classified as Digital Payment Tokens (DPTs). This means exchanges and wallet providers must register and then, obtain a license from the Monetary Authority of Singapore (MAS) before serving users.
The core promise of the PSA is this: build a forward-looking, flexible, risk-sensitive regulatory regime that supports innovation (FinTech, digital payments, “new” services), while ensuring appropriate safeguards for consumers, financial stability, and anti–money laundering / counter-terror financing (AML/CFT) controls.
U.S. and Japan’s Enforcement-Driven Model
In the United States, different agencies handle crypto rules — the SEC, CFTC, IRS, and FinCEN. That’s why you often see lawsuits and fights in the news. But behind all that noise, small traders still get clear guidance on the basics:
- The IRS treats crypto as property, meaning clear tax reporting rules (capital gains/losses with defined slabs).
- The SEC vs. CFTC debate shapes whether a token is a security or a commodity, but once classified, the rules of the game are transparent.
- FinCEN’s AML requirements ensure that exchanges implement KYC and monitor suspicious activity, so the users know platforms are accountable.
Meanwhile, in Japan, the approach has been stricter but more cohesive since 201. In both markets, traders can focus on the risks they choose (price swings, token selection) instead of being blindsided by risks they don’t control (unclear taxes, vanishing exchanges).
Sentiment on the Ground
I’ve spoken with fellow retail traders who share a common frustration. Many started with excitement, only to be discouraged by complicated compliance and unclear communication.
Others migrated to offshore platforms or DEXs, even if it meant legal grey zones. Few use tax-compliance tools like Koinly, ClearTax, or CoinTracker, but adoption is limited, as awareness is low.
My Simple Rules for Trading Crypto in India
Keep Track of Everything
No matter how small the trade, I save it. I take screenshots, download CSV files from exchanges, or use simple tax apps; these records are my safety net. When tax season comes, having clear proof of every move makes my life much easier.
Don’t Keep Everything in One Place
I trade on Indian exchanges to stay compliant, but I also keep a small part of my activity on global platforms for extra options. Suppose any exchange suddenly changes rules or policies, or any security breach issues, then I’m not trapped. Spreading out my trading activity across platforms makes me feel safer and gives me more flexibility.
Closing Thoughts
As per my understanding, the dream of India’s retail crypto traders isn’t just to catch the next bull run; it’s to participate in the decentralized economy without the fear of a sudden tax notice or regulatory crackdown. India has the talent, the youth, and the appetite to lead in Web3 adoption, but without regulatory clarity, that potential is being stifled.
At the end of the day, retail adoption starts with small trades, but it’s more about trust. And trust starts with clear, consistent rules.