India’s Crypto Adoption Grows as Policy Risk Remain in Focus

India’s Crypto Adoption Grows Faster Than Policy Clarity

India’s crypto story in 2025 is full of contrast. On one side, the country is among the largest crypto markets in the world by users. On the other, policymakers remain cautious, pointing to risks linked to digital assets. This gap between adoption and regulation is now at the center of a fresh debate.

According to recent remarks cited in a formal presentation to Parliament’s Finance Committee, the Income Tax Department has said that crypto carries serious risks and has supported the Reserve Bank of India in opposing wider crypto entry into the financial system. The comments have sparked renewed discussion across the Web3 community.

A Market With Massive User Growth

People are really getting into it, and it's growing super fast.  It's thought that about 119 million people were using crypto in 2025, and that number is likely to climb to 123 million by the year's end.  When you look at how many people are using it, India is leading pretty much everywhere else in the world.  

For a lot of these users, it makes it simple to get digital stuff, send money overseas, and explore new online money options.  A big reason for this boom is young coders, people who trade, and new businesses.  But even with all this happening, the government's rules are still pretty tough.

Source: X Account 

Tax Rules and Limited Revenue

Introduced a 30% flat tax on gains and a 1% TDS on each transaction in 2022. These were designed to track activity and generate revenue while discouraging excessive speculation.

However, data from the past three years shows that these measures have brought in around ₹1,100 crore in tax revenue. Many analysts see this as low when compared to the size of the user base and transaction volume.

Some industry voices argue that high taxes and TDS have reduced trading activity on domestic platforms. Others say users have shifted to offshore exchanges or reduced participation altogether.

Global Comparison Raises Questions

India’s approach looks even stricter when compared to other hubs.

• Singapore applies a 0% capital gains tax for individuals.
• Dubai offers tax-free personal income, including gains.

These regions have become magnets for Web3 firms and talent. In contrast, reports from 2025 Chainalysis data suggest that more Indian Web3 developers are moving abroad, looking for friendlier and clearer policies.

Talent Migration and Innovation Concerns

From a user point of view, this trend is worrying. Many builders feel that it has the talent and user base to lead in blockchain innovation. But unclear rules and heavy taxes make long-term planning hard.

Developers say they want clear guidelines, not blanket bans or constant uncertainty. Startups want room to test ideas while staying compliant. Everyday users want safety but also fair access and simple terms.

Calls for Targeted Policy Solutions

Some policy suggestions are now gaining attention. These include:

• Creating special economic zones (SEZs) for Web3 and blockchain firms
• Offering targeted incentives for compliant startups
• Testing new rules in limited regions before national rollout

Supporters point to examples like Wyoming in the United States. Wyoming’s DAO-friendly laws helped boost blockchain-related filings by about 40% since 2018, showing how clear rules can attract innovation without removing oversight.

Balancing Risk and Opportunity

The government’s concern over fraud, money laundering, and investor harm is not without reason. Global markets have seen scams, hacks, and sharp price swings. Risk awareness is important, especially for retail users.

At the same time, India’s large user base—estimated at over 93 million owners—represents a major economic opportunity. Many users believe that balanced rules could help keep talent at home while still protecting consumers.

What Users Are Watching Next

Right now, people are paying close attention to what politicians and government folks are saying. If they start setting up clearer rules, trying out some pilot projects, or offering special perks, it could really change how it develops going forward. It's not really a question anymore if Indians use crypto—they do. The big thing now is figuring out how the government can create policies that handle the dangers but still encourage new ideas. 

With talks happening in Parliament and elsewhere, India is at a really important point. What decisions are made now could determine if it leads the world in Web3 or if that progress happens somewhere else.

Disclaimer
This article is for informational purposes only and does not constitute financial or legal advice. Cryptocurrency involves risk, and regulations may change.