Growing Crypto Demand Could Push India Toward Regulatory Reform

Indian crypto educator Sujal Jethwani believes mounting user demand will force the government to reconsider its restrictive approach to digital assets. According to Cointelegraph, Jethwani spoke at the Binance Crypto-Powered Tour in Bhutan, where he expressed confidence that India's political landscape will change as more people embrace crypto assets.

Jethwani, who maintains a community of approximately 400,000 followers across social media platforms, observed a significant migration from traditional markets to cryptocurrency. "All the stock market and forex traders are moving to crypto," he told reporters. "There's a huge surge of crypto traders and investors in India right now. People are not going to leave it."

The educator described India's current crypto environment as a "suppressed spring," noting that despite harsh taxation and restrictive policies, traders continue to flock to digital assets. India currently imposes a flat 30% tax rate on profits from virtual digital assets, plus a 1% tax deducted at source on transactions exceeding $115. These measures were introduced in 2022 as part of the government's attempt to control crypto activity without implementing a comprehensive regulatory framework.

Why Government Action Becomes Inevitable

The scale of crypto adoption in India makes regulatory clarity increasingly urgent for policymakers. Statista projects India's cryptocurrency market will reach $6.4 billion in 2025, with over 107 million users representing 7.35% of the population. This massive user base creates economic and political pressure that becomes difficult to ignore.

Recent political developments suggest growing awareness among Indian leaders. In June, Pradeep Bhandari, national spokesperson for India's ruling party, called for the country to consider launching its own Bitcoin reserve following the United States' lead. Bhandari also requested regulatory clarity and positioned India to create a sovereign Bitcoin strategy.

We previously covered how India's government struggled with crypto policy decisions, oscillating between outright bans and experimental approaches. This historical pattern of policy uncertainty created the current environment where users operate under heavy taxation while awaiting clearer regulatory guidance.

The financial implications extend beyond individual traders. With India's crypto market projected to grow at an 18.48% compound annual growth rate through 2033, according to market research, the country risks missing significant economic opportunities if it maintains its restrictive stance.

Industry Transformation Depends On Regulatory Evolution

India's position in the global cryptocurrency ecosystem reflects broader tensions between innovation and control. While the country has not banned crypto outright, its high taxation and lack of comprehensive regulation place it in a unique position compared to nations with clearer frameworks. ClearTax reports that the current tax structure includes no deductions except acquisition costs, and losses cannot be offset against other income.

The regulatory uncertainty affects India's competitiveness in blockchain innovation. Despite having one of the world's largest tech workforces, Indian companies face challenges competing with businesses in jurisdictions offering clearer crypto regulations. This situation could change if user pressure leads to more favorable policies.

International trends support Jethwani's prediction of eventual policy shifts. As major economies develop comprehensive crypto frameworks, India faces pressure to avoid being left behind in the digital asset revolution. The Financial Stability Board's upcoming review of global crypto regulation implementation adds external pressure for policy clarity.

Market data suggests the government may need to act sooner rather than later. Bar and Bench analysis shows India is expected to introduce a comprehensive legislative framework for crypto regulation, including licensing requirements and investor protection measures. Until then, current tax and compliance provisions serve as the primary regulatory mechanisms.

The growing institutional interest in crypto assets, combined with retail adoption rates, creates momentum that becomes increasingly difficult to suppress through taxation alone. Whether Jethwani's prediction proves accurate may depend on how effectively crypto users can demonstrate the economic benefits of clearer, more supportive regulation to Indian policymakers.