Crypto Adoption & Blockchain Outlook in India

Key takeaways

• India’s crypto sector is expected to be worth $6.4 billion with estimated 107 million users.
• India’s crypto regulations remain in a grey zone, allowing trading but lacking a comprehensive legal framework
• India is piloting blockchain solutions across sectors, from land record digitisation to agricultural seed tracking, demonstrating its potential for transparency, security, and efficiency.
• A uniform 30% tax plus 4% cess on crypto gains

Introduction

India’s engagement with cryptocurrencies and blockchain technology has seen rapid evolution, influenced by technological advancement and changing market dynamics. The Indian crypto space now depends on a few key factors like user adoption, the tax policies and the regulatory frameworks implemented by the government. To highlight India’s changing digital‑asset sector, this overview looks at adoption, the tax system, regulations, and several notable uses of blockchain in India.

Crypto Adoption Outlook in India

India’s crypto adoption is advancing steadily and this advancement is due to the tech‑savvy youth and better digital infrastructure in India. The Indian crypto market is projected to reach USD  6.4 billion and has 107 million estimated users in 2025, with a user penetration rate (percentage of population owing cryptocurrency) of 7.35 %. India also ranked first in the Chainalysis Global Crypto Adoption Index consequently over the last 2 years, leading in both on‑chain value and retail transaction value on centralised platforms weighted by GDP per capita on a Purchasing Power Parity (PPP) adjusted basis.

TOP COUNTRIES BY GLOBAL CRYPTO ADOPTION INDEX 

Source: Chainalysis

Several factors are contributing to this momentum:

• India’s digital infrastructure is growing and the increasing use of digital wallets has made investing in cryptocurrencies more accessible.
• The Digital India initiative, started by the government with projects like the Unified Payments Interface (UPI) and the Aadhaar‑Enabled eKYC, has helped to create a suitable setting for digital platforms which has indirectly helped with crypto adoption.
• Exchanges like Coinswitch and CoinDCX, which operate within India, have given people an easier way to participate in trading and investing in digital assets. 

Blockchain Adoption

Apart from crypto, blockchain technology is being used in different sectors in India. The fact that it promotes transparency, security, and efficiency has allowed many pilot projects to be implemented.

Some notable use cases :

Crypto Taxation in India as of 2025 

India has introduced a tax structure for cryptocurrencies, naming them as Virtual Digital Assets (VDAs) under the Income Tax Act.

Key provisions include:

• As per Section 2(47A), VDAs include cryptocurrencies, NFTs, and other digital assets generated through cryptography or derive its value from blockchain technology that can be electronically transferred, stored, or traded, excluding government-recognised currencies.
• A flat tax of 30% on gains from Virtual Digital Assets (VDAs) plus 4% cess under Section 115BBH, regardless of the holding period, with no deductions allowed except the cost of acquisition. Additionally, 1% TDS applies to transactions exceeding ₹50,000.
• Mandatory tax reporting via ITR-2 (for capital gains) or ITR-3 (for business income), using a dedicated Schedule VDA. 

Importantly, losses from VDAs cannot be offset against any other income or gains from any other crypto eg. If you sell Ethereum at a ₹5,000 loss and you make a ₹10,000 gain on Bitcoin, you still owe tax on the full ₹10,000 gain because you cannot use the ₹5,000 Ethereum loss to reduce your Bitcoin profit. They also cannot be carried forward, and related expenses (except acquisition cost) are not deductible. Industry players continue to urge the government to reduce the 30% tax rate and 1% TDS to encourage wider participation, though no such revisions were announced in the Interim Budget 2025. 

Regulatory Landscape

As of May 2025, India hasn’t made full laws in regards to cryptocurrencies yet, leaving them in a situation where it is still a grey area. Crypto assets cannot be used to pay for things like your local ₹ which is a legal tender, but people can buy and sell crypto. This means they cannot be used for payments but are permissible for investment purposes.

The regulations regarding cryptocurrencies are not yet clear in India, and there isn’t a set anticipated timeline for the introduction of a comprehensive regulatory guideline for the virtual digital assets industry in India. International moves, like the U.S strategic crypto reserves and the G20 calling for countries to work together on crypto rules, will probably play a big role in determining how India regulates the use of cryptocurrencies.

In the absence of formal rules, people stay unsure of how things should be done. Several voices in the industry want to see a collaborative effort between different agencies to support a sustainable growth trend in the market.

Conclusion

India’s crypto and blockchain ecosystem in 2025 reflects a dynamic mix of progress and pending policy decisions. While the Indian crypto market is projected to reach $6.4 billion with over 107 million users, adoption is hampered by high taxes and regulatory uncertainty. 

Blockchain innovation, on the other hand, is already getting applied in areas such as land governance, agriculture, healthcare, and digital identity.

 Thus, high taxation and regulatory ambiguity may act as barriers to sustained adoption. The need for clearer policy frameworks remains a key concern among industry stakeholders. 

FAQs

• What is the current regulatory framework for crypto in India?

India lacks a comprehensive crypto law, regulations remain a grey area, with trading allowed but subject to evolving guidelines and oversight proposals.

• How might global trends influence India’s crypto regulations?

International associations like G20, which form frameworks and guidelines from bodies like the IMF are expected to play a significant role in shaping India’s future regulatory approach.

• What is the “grey area” in crypto regulation?

The lack of clear, comprehensive laws governing crypto use and compliance.