The crypto market

Learn crypto trading in India: Bitcoin, Ethereum, spot, futures, options, exchanges, taxation, FIU rules and investor risks.

Cryptocurrencies are digital assets that use cryptographic techniques and, for most of them, a distributed ledger called a blockchain. They are traded internationally, and most crypto markets trade continuously, around the clock, seven days a week, with no exchange holiday.

A cryptocurrency is not a government-issued currency, not a company share, and not a bank deposit. It carries none of the protections that come with those things.

India’s position, in short. There is no general blanket prohibition on owning or trading cryptocurrencies. They are not legal tender. Crypto trading platforms do not automatically receive the same regulatory oversight or investor protection as recognised Indian stock exchanges. Tax law, anti-money-laundering law and other applicable laws govern parts of the market, and a comprehensive crypto-specific framework remains unresolved.

This is an educational overview, not financial, tax or legal advice. The position here is genuinely unsettled and changes. Verify with a qualified professional before acting.

What are cryptocurrencies?

Bitcoin (BTC) is a decentralised digital asset with a fixed issuance schedule, capped at 21 million coins. It functions as a transferable digital asset. Its price is highly variable, and nothing about it guarantees it will retain value. It is not backed by any government or by a claim on any asset.

Ethereum (ETH) is different in kind. Ethereum is a blockchain network that supports smart contracts, which are programs that execute automatically under stated conditions and are the basis of decentralised applications. ETH is that network’s native asset, used to pay for computation on it.

Stablecoins are designed to track the value of a reference asset, usually the US dollar. USDT and USDC are the best-known examples. The word “stable” describes an intention, not a guarantee. A stablecoin can and has lost its peg, and it carries reserve, issuer, redemption, custody and regulatory risk.

Other tokens fall into utility tokens that grant a function, governance tokens that grant voting rights, and speculative tokens whose value rests mainly on demand. Token names and marketing descriptions establish nothing about legal classification or investment quality.

India’s digital rupee, or e₹, is not a cryptocurrency. It is the Reserve Bank of India’s Central Bank Digital Currency, a central-bank liability. That distinction is not cosmetic:

The e₹ is closer to digital cash than to Bitcoin.

How blockchain and ownership work

A blockchain is a database shared across many computers. Transactions are grouped into blocks, linked in sequence, and validated by network participants rather than by a central registrar. Once recorded, an entry is extremely difficult to alter.

That does not mean assets sit in a wallet as coins in a vault. A wallet address is public, like an account number. The private key is what proves you control it, and whoever holds that key controls the asset. A seed phrase, usually twelve or twenty-four words, is the master secret from which your keys are generated. Lose it and nobody, including the exchange, can restore it.

This creates the central distinction in crypto trading:

Neither is safe. Custody concentrates risk in a private company with no regulatory guarantee. Self-custody removes that counterparty but makes you solely responsible for a secret that cannot be reset, and phishing, malware and lost hardware remain real threats. Self-custody reduces dependence on a platform; it does not eliminate risk.

Types of crypto trading

Spot trading means buying or selling the asset itself. Note that holding a balance on an exchange is not the same as controlling a blockchain wallet: the exchange holds the keys.

Futures give price exposure without requiring ownership of the underlying. You can go long (expecting a rise) or short (expecting a fall). The trade is backed by margin rather than full value, and leverage is the ratio of position size to margin committed. If the position moves against you far enough to breach the margin, it is liquidated and you lose the margin, and possibly more.

Perpetual futures have no fixed expiry. To keep the contract tracking the spot price, the two sides exchange periodic funding payments. Funding schedules and settlement mechanisms differ between contracts and platforms, so read the specific contract rather than assuming a standard.

Options are the most easily misread product here. A call gives the right to buy at a strike price; a put gives the right to sell at one. You pay a premium up front. Options may be cash-settled or crypto-settled, which changes who pays in what. Exercise mechanisms differ between platforms, so do not assume one product behaves like another.

Buying an option usually limits your contractual loss to the premium, plus fees. Writing an option, where you sell the right, carries substantially larger obligations and margin requirements. It is the direction people lose money.

Trading hours and what moves prices

Most crypto spot and derivatives markets trade continuously, including weekends and public holidays. Individual platforms still impose maintenance windows, trading halts, instrument restrictions and outages, and there is no exchange holiday notice to warn you in advance the way there is on an exchange like the NSE.

Prices respond to global sentiment and supply and demand, monetary policy and interest rates, regulatory announcements, institutional participation, token issuance, network developments, and large liquidations. Exchange failures and security incidents move prices sharply.

Leverage feeds back into this. A falling market forces liquidations, forced selling pushes the price lower, which forces more liquidations.

A simple example. Suppose a crypto asset rises 5%.

• Holding it unleveraged: a 5% gain on what you paid.
• Holding it at 10 times leverage, with the full 10% margin committed: a 50% gain on your margin, and that is before fees and funding.

Now suppose it falls 5% instead. At 10 times leverage that is a 50% loss on the margin. Most leveraged positions carry a maintenance margin, so a move that reaches it triggers liquidation before the position is wiped out, and the level at which that happens depends on the exchange, the contract and the leverage you chose.

India’s crypto legal position

There is no general blanket prohibition on owning cryptocurrency in India. What is absent is a framework, and that is a different thing.

• Private cryptocurrencies are not legal tender. Nobody is obliged to accept them.
• Crypto transactions may attract income tax, TDS, anti-money-laundering reporting and other applicable laws.
• Certain service-provider activities fall within PMLA reporting, supervised by FIU-IND.
• The existence of taxation does not confer legal authorisation on a product or a trading arrangement. Taxing something is not approving it.
• Crypto markets do not automatically receive the investor protections that apply to SEBI-regulated exchanges.

Some questions remain genuinely unsettled rather than merely unregulated: the legal status of offshore platforms serving Indian residents, and the treatment of crypto derivatives, which raise questions distinct from direct ownership. Be careful with blanket statements in either direction. Offshore location alone does not remove Indian tax obligations, and a platform being foreign is not by itself proof that every transaction through it is unlawful.

India’s regulatory timeline

Two points of precision. The Supreme Court set aside the circular rather than the RBI “withdrawing” it, and only the circular dated 6 April 2018 was set aside. And a Bill appearing in a legislative agenda is a statement of intent; nothing binds anyone until it is passed.

The regulators involved

RBI governs monetary policy, banking regulation, payment systems and financial stability. It has publicly expressed concerns about private cryptocurrencies and has not advocated granting them positive legal status.

SEBI regulates India’s securities markets and recognised derivatives exchanges. Being SEBI-registered as a stock broker does not make a private crypto exchange, or its derivatives, SEBI-regulated.

FIU-IND receives financial intelligence and administers AML registration and reporting obligations. FIU registration is not investment-product approval, and it does not mean a platform is government guaranteed, SEBI-regulated or backed by a clearing corporation.

The Ministry of Finance and the Income Tax Department set tax policy and administer the applicable framework.

Parliament enacts law. Proposed bills, committee studies and policy recommendations are none of those things, and an institutional opinion is not binding law.

Taxing crypto in India

The 30% rate and cess

Income from the transfer of a virtual digital asset is taxed at a special flat 30% rate, regardless of how long you held the asset or what your slab would otherwise be. There is no short-term versus long-term distinction here, unlike equities.

Add 4% health and education cess on the tax. With no surcharge that is an effective 31.2%. Surcharge, where it applies, increases the effective liability further.

Section numbers have changed with the new Act. For earlier periods the 30% rate was in Section 115BBH of the Income-tax Act, 1961, and the TDS provision was Section 194S. From 1 April 2026 the Income-tax Act, 2025 applies, and the corresponding provisions are Section 194(1) of that Act (Table, Sl. No. 4) for the rate and Section 393(1) for the TDS. The arithmetic is unchanged; the section numbers moved. A section number is not a tax rate, and Section 194(1) of the 2025 Act is not Section 194(1) of the 1961 Act, which is the payroll TDS provision you may already know.

Losses, and what you can deduct

This is where the special regime is most punishing:

• Only the cost of acquiring the asset is deductible. Trading fees, platform charges and advisory costs are not separately deductible under this provision.
• A loss on one VDA cannot be set off against a gain on another VDA.
• It cannot be set off against salary, business income or capital gains.
• It cannot be carried forward to a later year.

A worked example

You record a qualifying gain of ₹50,000 on one VDA transfer, and a loss of ₹30,000 on another.

Under the special regime the ₹30,000 loss cannot offset the ₹50,000 gain. Assuming no surcharge:

The ₹30,000 loss is not recoverable against anything. This is a simplified illustration, not a return.

The 1% TDS

The VDA TDS operates separately from your final tax liability, and two points are routinely confused.

It is charged on the consideration for the transfer, not on your profit. On a ₹50,000 transfer, 1% is ₹500, whatever your margin. A profitable sale and a loss-making sale can both attract TDS.

It is an advance tax credit, not an extra 1% tax. It is generally claimable against your final liability through your tax credit statement.

Thresholds still bite. TDS does not arise at all until the aggregate consideration for the year crosses a floor, and the floor differs by payer. Under the Income-tax Act, 2025 the VDA rate sits at Section 393(1), Table Sl. No. 8(vi), and the threshold exclusions are in Section 393(4), Table Sl. No. 12:

• ₹50,000 for a specified person, meaning an individual or HUF whose business turnover or professional receipts are below the prescribed limits.
• ₹10,000 for every other payer.

Where PAN is not furnished, TDS is generally deducted at 20% for qualifying VDA transfers, subject to Section 397 and other applicable provisions. This is withholding tax, not the final tax rate on the transaction’s profit, so a 20% deduction says nothing about what rate you will ultimately pay on a gain.

Reporting in your return

VDA income is reported in Schedule VDA of your income-tax return. Under the new Act the terminology changed from previous year and assessment year to tax year, which changes labels rather than numbers.

Crypto-asset reporting and self-custody

Section 509 of the Income-tax Act, 2025, with Rules 242 to 244 of the Income-tax Rules, 2026, creates a reporting framework for reporting crypto-asset service providers, a prescribed category of platform rather than every exchange. It applies from the calendar year beginning 1 January 2026.

Providers must maintain and report specified transaction information: customer identification, and aggregates of what each customer bought, sold, received and transferred, in rupees, by asset type.

External wallets are inside the framework. A provider must report transfers it effects to wallet addresses it does not know to belong to another virtual asset service provider or financial institution. Two details are worth knowing:

• The provider must collect and retain external wallet addresses for not less than seven years.
• The addresses themselves are not reported in the statement. The provider reports the aggregate value and number of units, and keeps the addresses on file.

The statement is furnished in Form 167, by 31 May of the calendar year following the year it relates to, so reporting is annual. A nil return is filed where due diligence identifies nobody reportable, so the absence of a return is itself a signal.

Moving cryptocurrency to a self-custody wallet does not make the activity anonymous, and it does not remove your tax obligations. Three things keep holding:

• The reporting exchange records the outgoing transfer and the destination wallet address, and retains both for seven years.
• On-chain transactions are publicly visible and permanently traceable. They are pseudonymous, not anonymous.
• Your own reporting obligation is unaffected by where the asset sits.

The honest limitation is narrower than “the trail disappears”. A transaction conducted entirely through self-custody wallets, with no reporting service provider involved at any point, may not produce the same platform-level records as one executed through a reporting exchange. That is a gap in third-party reporting, not an exemption from tax, and not evidence that the activity is untraceable.

So keep your own records, because the ones that are easiest to lose are the ones nobody else is obliged to hold for you.

Taxing crypto futures and options

Do not assume the spot rules above apply to every crypto derivative transaction. The treatment can depend on:

• whether you transfer an actual VDA,
• whether the contract is cash-settled,
• whether settlement involves actual delivery,
• the legal form of the contract,
• whether the activity constitutes a business,
• which income-tax provisions and interpretations apply.

So it would be wrong to declare that every crypto futures or options transaction necessarily attracts the 30% special VDA rate, and equally wrong to declare they all escape it. The honest answer is that the treatment of crypto derivatives is less settled than the treatment of spot, and that a platform’s tax page is the platform’s interpretation, not guidance from the Income Tax Department.

If a tax treatment is uncertain, take written advice. It is not a route to avoiding the 30% rate.

FIU-IND and offshore platforms

Specified virtual digital asset service-provider activities fall within the PMLA reporting framework, administered by FIU-IND. Covered activities include exchanging between VDAs and fiat currency, exchanging between different VDAs, transfers, custody or administration, and certain financial services connected with issuing or selling VDAs.

The machinery exists to fight money laundering: KYC to identify customers, suspicious transaction reports to the FIU, and ongoing monitoring.

Three things FIU registration does not mean:

1. The platform is SEBI-regulated.
2. The platform is government guaranteed.
3. Your funds are protected by a clearing corporation.

Offshore platforms face real enforcement action

In its answer to Lok Sabha Unstarred Question No. 5805 of 30 March 2026, the Ministry of Finance stated that FIU-IND had directed the takedown of the applications and URLs of 53 virtual digital asset service providers found to be operating illegally in India without complying with the PMLA. The annexure names offshore providers, and the names are not obscure: Binance, KuCoin, Huobi, OKX, Bybit, Coinbase, Kraken, Gate.io, Bitfinex, Crypto.com and MEXC all appear on it, alongside a long tail of smaller venues.

So “I use an offshore exchange so Indian rules don’t apply” is not a safe assumption. It is the precise conduct the authorities have acted against. Note what this does not say either: the Ministry did not declare owning crypto illegal, and nothing here makes offshore use a criminal offence for the user. The practical risk is access, counterparty and lost funds, not prosecution.

But that list is a record of past action, not a current blacklist. Two things prevent it being read as a verdict on today’s status.

The document does not state whether any given named platform remains unauthorised today. A takedown direction is a point-in-time event, and enforcement and registration can move in either direction afterwards.

More usefully, four of the named platforms appear in both annexures of the same answer. Binance, KuCoin, Bybit and Coinbase are on the takedown list and on the FIU-IND registration list. Those are not contradictory entries. The registration entries are held by specific legal entities, several of them incorporated offshore: KuCoin appears as Peken Global Limited (Seychelles), Binance as Nest Services Limited, formerly Binance International Limited (Seychelles), and Bybit as Bybit Fintech Limited (Seychelles).

That is the pattern to understand, and it cuts against a lazy reading in both directions. A platform brand being named in a takedown direction does not prove the brand is still blocked, and a group holding a registration through one entity does not mean every brand or every product in that group is authorised. Neither list is a live status check, and there is no public register to make it into one.

And offshore location is not a tax shield either way. A platform serving Indian residents from outside India may still engage Indian reporting requirements, and your tax and disclosure obligations apply in full regardless of where the platform is based.

There is no public register of registered platforms, and that is deliberate

The same answer asked whether a public portal exists for checking which VDA providers are registered. The reply was no, and the reason is worth quoting because it is the whole point of this lesson:

FIU-IND has not made the list of registered VDA SPs public due to its specific mandate under the PMLA, 2002 which is limited to ensuring compliance with Anti-Money Laundering (AML)/Counter Financing of Terrorism (CFT) obligations. The registration database is primarily meant for Law Enforcement Agencies (LEAs) and supervisory purposes. Publishing a public list may create the impression that registered entities are licensed, approved, or endorsed by the government.

Read that last clause carefully. The Government deliberately withholds this list precisely so that registration cannot be mistaken for approval. A platform pointing you at an FIU certificate is therefore not evading anything: registration is an anti-money-laundering obligation, and the Government’s stated position is that it should not be advertised as a mark of quality.

The Ministry also noted that VDA exchanges are not registered under the Companies Act, 2013 as crypto exchanges. That is easily misread, so it is worth being precise about what it does and does not say.

Incorporation under the Companies Act, 2013, establishes a company’s legal existence. It does not constitute regulatory authorisation to operate a cryptocurrency exchange or offer crypto investment products. The distinction matters because most of the entities in the parliamentary list above, including Neblio Technologies, Awlencan Innovations India and RPFAS Technologies, are incorporated Indian private companies, and Bitcipher Labs is an LLP. They exist perfectly legally. What they do not have is approval to sell you an investment product, and FIU registration does not supply one.

Who is actually behind the platform

The brand you trade is rarely the legal entity you have a contract with. A parliamentary answer is the only independent source that names them, and it is worth using. The Ministry’s Annexure I lists 54 VDA service providers registered with FIU-IND as of 9 March 2026, including all five platforms discussed here:

Two things to read carefully here.

CoinSwitch and CoinSwitchX are separate entries under different legal entities. If you hold an account on one and check that “CoinSwitch is registered” against a contract signed by the other, the reassurance does not transfer. The entity on your own agreement is the one that matters, and the PDF is often the place where it appears.

This is a historical list, not a live authorisation check. It establishes that an entity was registered with FIU-IND as at 9 March 2026, and the answer itself says there is no public register to check today. It also does not tell you which entity operates every product currently advertised, because registration attaches to the notified service-provider activities, not to a product catalogue.

One more specific point. Delta Exchange publishes an identifier, REID VA00041101, in its own disclosures. The parliamentary annexure confirms Excelium Technologies Private Limited is on the register, but it does not carry REID numbers, so that identifier remains Delta’s own claim and has not been matched to an official register here.

Crypto exchanges and trading platforms in India

Product availability was checked against each provider’s own published website on 14 October 2026. CoinDCX, CoinSwitch and Delta Exchange India each publish active futures and options products, which is what marks them out. For ZebPay and Mudrex, spot and futures are published, and no active options product was confirmed, so options sits in the last column rather than being marked “No”. That is a statement about what could be checked, not a claim that options are impossible.

Two details do not fit in a third column, so they go here. CoinDCX, CoinSwitch and Delta Exchange India all settle in INR. The futures ZebPay and Mudrex publish are perpetual contracts, which carry a funding payment instead of a fixed expiry.

The FIU-IND registration of the operating entities behind all five was confirmed separately against the Ministry of Finance’s Lok Sabha Unstarred Question No. 5805 of 30 March 2026, Annexure I, as at 9 March 2026. That is registration evidence only. It says nothing about whether a product is currently offered, which is why the product check and the registration check are separate rows of work and are dated separately here.

Products, listings and availability change. Check the platform before you trade.

The platforms above are listed for educational comparison, not as a recommendation or endorsement. FIU-IND registration concerns anti-money-laundering compliance and does not confer SEBI-style investor protection. Products, registration status and availability may change. Verify the platform and its contract terms before trading.

T7 Wealth may receive a referral commission from the Delta Exchange link marked above. It is disclosed here rather than hidden, and it does not affect how any platform is described.

Spot platforms versus derivatives platforms

Spot-focused platforms let you buy and sell the actual asset. What matters is custody, withdrawals, which assets are supported, and transaction costs.

Derivatives platforms give leveraged exposure through futures, perpetuals or options. What matters is margin requirements, liquidation rules, funding charges, expiry settlement, leverage, whether an insurance or risk fund is advertised, whether auto-deleveraging applies, and how outages and contract-specific rules are handled.

Some platforms offer both. A derivative product does not give you ownership of the underlying crypto.

Crypto derivatives versus regulated Indian F&O

This is the comparison worth sitting with.

Regulated Indian exchange-traded F&O means futures and options traded on recognised exchanges under SEBI, clearing-corporation and exchange rules. Eligible equity, index, currency and commodity contracts sit here. You get standardised contract specifications, clearing arrangements, published margin rules, exchange and broker oversight, and a regulatory grievance route. Investor protection arrangements exist and have real limits, and a demat account is generally involved for the equity segment.

Crypto F&O means privately operated platforms offering cryptocurrency-linked derivatives. Oversight, clearing, custody, dispute resolution and customer protection may differ substantially, and there is no exchange-clearing guarantee.

Two errors to avoid in either direction. FIU registration does not make a crypto platform equivalent to regulated F&O. And regulated F&O is not risk-free: market losses, leverage and broker risk all exist there too. The difference is the framework around them, not the absence of risk.

Crypto risks

• Volatility. Prices can move sharply in minutes.
• Leverage and liquidation. Small moves become large percentage losses against margin.
• Custody. You may depend on a platform’s security and its financial condition.
• Exchange insolvency or fraud. Withdrawal delays or collapse can mean substantial loss.
• Cybersecurity. Hacking, phishing, compromised accounts and stolen keys.
• Stablecoin risk. A depeg or issuer problem turns a “dollar” holding into something else.
• Liquidity. Thin books and sharp moves mean slippage on entry and exit.
• Regulatory change. Law or enforcement can affect availability, trading and transfers. This is not theoretical: 53 offshore providers’ sites were ordered taken down in India as at March 2026.
• Tax. Wrong assumptions about spot versus derivatives create real liabilities.

None of this means crypto transactions have no legal remedy of any kind. It means the protections available are considerably weaker and differently shaped than in India’s regulated securities markets.

How to evaluate a platform

• Which legal entity actually operates it, and where is it registered? The brand name is not the entity, and the group may operate several.
• What is its FIU or other regulatory status, stated as a fact rather than implied? Remember there is no public register, so a self-published certificate is the only thing most users will ever see.
• Is the product spot crypto or a derivative?
• Custody: who holds the keys, and under what arrangement?
• Deposits and withdrawals, and is INR settlement available?
• Fees and spreads across the instruments you would actually trade.
• Margin, leverage and liquidation rules.
• Any insurance or risk fund advertised, and what it does not cover.
• Dispute resolution, governing law and jurisdiction.
• Tax reporting it provides.
• Security controls, and whether any certification is independently verifiable.

Treat claims about safety, liquidity or returns as marketing until verified independently. And the old warnings still hold: guaranteed-return schemes, cloned websites, impersonation accounts, and anyone asking you to send funds to a personal bank account are all fraud patterns.

Next: derivatives.