• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
CoinLaw LogoCoinLaw

Bringing Crypto and Finance Closer to You

  • Latest News
  • Statistics
  • About
  • Contact
Subscribe
CoinLaw Logo
  • Latest News
  • Statistics
  • About
  • Contact
Subscribe
Home Β» Cryptocurrency

India’s Tax Arbitrage Drives Crypto Into Unregulated Futures

Published on: July 15, 2026
Kelvin Scott
Written By
Kelvin Scott
Kelvin Scott
Finance News Analyst • 534 Articles
Kelvin Scott, with over 8 years of experience, covers the latest trends in digital assets, financial markets, and regulatory developments. W... See full bio
LATEST POSTS:
ABA, ICBA Urge Senate to Close Stablecoin Yield Loophole
Coinbase Prime Gets $250 Million in Seized US Bitcoin
Strategy Adds $450 Million to Its USD Reserve
Barry Elad
Reviewed By
Barry Elad
Barry Elad
Founder & Senior Journalist • 586 Articles
Barry Elad is a finance and tech journalist who loves breaking down complex ideas into simple, practical insights. Whether he's exploring fi... See full bio
LATEST POSTS:
How Many Bitcoins Are There 2026: Growth and Circulating Supply
Largest Investment Banks Statistics 2026: Revenue, League Tables and Headcount
Best Crypto Exchanges in the US 2026: Fees, Volume and Licenses Compared
India S Tax Arbitrage Drives Crypto Into Unregulated Futures
As Featured In
Bloomberg LogoForbes LogoFortune LogoCoinDesk LogoCoinMarketCap Logo
Share on LinkedIn ChatGPT Perplexity Share on X Share on Facebook

Crypto derivatives accounted for 80% or more of India’s domestic digital-asset trading volume as of July 15, 2026. Traders are shifting away from spot exchanges to sidestep the country’s 1 per cent tax deducted at source on spot transactions, exchanges and industry experts say.

Key Takeaways

  • Crypto futures markets now capture 80% or more of India’s total domestic crypto trading volume, reversing spot exchanges’ historical lead.
  • India taxes spot crypto trades with a 1 per cent tax deducted at source, while futures trades escape it entirely, pulling volume toward derivatives.
  • Internal exchange data shows 70 to 80 per cent of crypto derivatives participants are losing money, with individual traders driving most of the activity.
  • The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) both decline authority over crypto trading, leaving derivatives without any leverage limit.
  • The Financial Stability and Development Council has asked the RBI and SEBI to consider regulating the sector, according to government sources.

What Happened?

Leverage widens the gap further. Some smaller exchanges allow up to 100 times leverage on crypto futures, and a typical futures trader executes more than 50 trades a month, according to Giottus. SEBI caps leverage on equity derivatives at five times, a limit crypto futures never inherited, a gap flagged directly, per Moin Ladha of Khaitan & Co.

Daily transaction values on Indian crypto exchanges have surged to nearly $5 billion, as traders pile into futures free of the spot market’s tax drag. Individual investors drive roughly 70% of that futures activity, the same retail base absorbing most of the reported losses.

Section 115BBH of the Indian Income Tax Act is the root cause, a dynamic distinct from the more active US enforcement posture. It taxes virtual digital asset transfers at a flat 30% rate, with no deduction for expenses beyond the cost of acquisition and no set-off or carry-forward of losses. Many tax professionals instead treat futures profits as speculative business income, a category that does permit loss set-offs, making derivatives the more tax-efficient venue even before the 1% levy is counted.

Crypto is thriving because of the lack of regulatory clarity. In the last couple of years, a lot of F&O traders have migrated to crypto because of the low margins and ridiculous leverage they get in crypto F&Oβ€”leverage as high as 100x to 200x.

From @moneycontrolcom article (link… pic.twitter.com/DSfcf3iN31

β€” Nithin Kamath (@Nithin0dha) July 15, 2026

The Jurisdictional Vacuum

India has no dedicated crypto regulator because cryptocurrency is not legally defined as a currency, a commodity, or a security. Neither SEBI nor the Reserve Bank of India regulates crypto trading as a result, and the finance ministry has told Parliament that virtual digital assets remain unregulated in the country.

Ladha, a partner in Khaitan & Co’s corporate and financial regulatory practice.

β€œ

There is a case for a calibrated regulatory framework for crypto futures, particularly given their leveraged nature and the potential risks for retail participants.

Moin LadhaPartner – Khaitan & Co

He added that a well considered regulatory approach could help strengthen investor protection while supporting responsible market development.

A government official, speaking anonymously, said the RBI has pushed crypto oversight toward SEBI but that neither wants to take it on, because regulating the sector would mean formally recognising crypto, which the government does not want to do. The same official warned that investors could lose money completely if exchanges collapse, noting that equity markets carry safeguards crypto trading does not. That is the vacuum in one sentence: a tax code detailed enough to price every trade, sitting next to a regulatory apparatus that has not decided crypto is real enough to police.

A Tax Code With No Regulator Behind It

The tax framework built around Section 115BBH generates revenue without needing anyone to police the market it taxes. Around three-fourths of India’s crypto trading happens through foreign exchanges such as Binance and Bybit, largely to route around the domestic levies. Finance ministry data disclosed to the Rajya Sabha in December 2025 put the declared domestic VDA transaction value at Rs 51,180 crore for FY2024-25, yielding Rs 511.83 crore in TDS.

That collection has grown quickly. The government had earlier reported Section 194S TDS collections of Rs 157.9 crore for FY2022-23, meaning TDS receipts from VDA transfers have more than tripled in two fiscal years. Those official figures capture only compliant domestic spot trading; the larger derivatives market and offshore volumes go entirely unreflected in government tax receipts.

Newsletter Img
Don't chase the news. Let us curate it.

You get one weekly briefing with only the stories that matter. If the market is quiet, we skip it.

βœ… Join readers from Visa, Mastercard, Vanguard, and the FDIC.

Implications for India’s Crypto Market

Some exchanges argue the picture is already shifting through a different channel. Tokenised real world assets already contribute nearly 15% of trading volume at Mudrex across spot and futures, a share the exchange expects to reach about 20 to 25% within a few quarters, according to Prateek Gupta, the platform’s head of business. Gupta said the broader tokenised RWA market has already exceeded $25 billion in volume globally this year.

Tokenised RWAs sit on regulated underlying instruments rather than anonymized derivatives flow, which could eventually hand Indian regulators a more traceable entry point into digital asset oversight than chasing offshore futures volume ever would.

The broader imbalance is self reinforcing. As long as spot trades carry a heavier, loss-blind tax than futures booked as speculative business income, capital is likely to keep migrating toward the venue with fewer investor protections rather than more, inverting what SEBI’s own equity-derivatives curbs were built to prevent retail traders.

CoinLaw’s Takeaway

Crypto futures still account for 80% or more of India’s domestic trading volume, the product of a tax code that taxes spot trades heavily while leaving futures largely tax and rule free. That reward structure favors the least protected corner of the market. Retail traders who cannot absorb rapid losses are the ones carrying leverage that no regulator currently limits.

A calibrated framework, the kind Moin Ladha and other securities lawyers have floated, would need to do two things Indian policy has so far avoided: give one regulator clear jurisdiction over crypto derivatives, and stop taxing losses out of the spot market so traders are not pushed toward the least regulated venue just to keep more of what they earn. Until that happens, the Financial Stability and Development Council’s request for RBI and SEBI to weigh in reads less like a policy in motion and more like a placeholder for a decision the government has not yet chosen to make.

This article has been reviewed and fact-checked by Barry Elad. CoinLaw follows strict Publishing Principles and a documented Fact-Check Policy to ensure accuracy, transparency, and editorial independence across all content.

Add CoinLaw as a Preferred Source on Google for instant updates! Follow on Google News
Share ChatGPT Perplexity

References

  • Tax Arbitrage Drives Crypto Futures to 80% of India's Trading Volume (Moneycontrol, July 2026)
  • Section 115BBH: Tax on Income From Virtual Digital Assets, Income Tax Department
Kelvin Scott

Kelvin Scott

Finance News Analyst


Kelvin Scott, with over 8 years of experience, covers the latest trends in digital assets, financial markets, and regulatory developments. With a strong focus on accuracy and clarity, he delivers timely updates to help readers navigate the fast-changing world of crypto and finance. An avid football fan, he never misses a chance to watch a good match, whether it’s Premier League drama or a local game.

Related Posts

Metamask Marks 10 Years Unveils Open Money Platform
Cryptocurrency

MetaMask Marks 10 Years, Unveils Open Money Platform

Confirmo Launches Stablecoin Subscriptions
Cryptocurrency

Confirmo Launches Stablecoin Subscriptions With On-Chain Caps

Linux Foundation Launches X402 Foundation For Ai Payments
Fintech

Linux Foundation Launches x402 Foundation for AI Payments

Disclaimer:Β The content published on CoinLaw is intended solely for informational and educational purposes. It does not constitute financial, legal, or investment advice, nor does it reflect the views or recommendations of CoinLaw regarding the buying, selling, or holding of any assets. All investments carry risk, and you should conduct your own research or consult with a qualified advisor before making any financial decisions. You use the information on this website entirely at your own risk.

Reader Interactions

Leave a Comment Cancel reply

Primary Sidebar

Connect With Us

facebook x linkedin google-news telegram pinterest whatsapp email
google-preferred-source-badge Add as a preferred source on Google

You Should Also Read

How Many Bitcoins Are There 2026: Growth and Circulating Supply
South Korea Schedules 2027 CBDC Bond Tokenization Pilot
Coinbase Prime Gets $250 Million in Seized US Bitcoin

Table of Contents

  • Key Takeaways
  • What Happened?
  • The Jurisdictional Vacuum
  • A Tax Code With No Regulator Behind It
  • Implications for India’s Crypto Market
  • CoinLaw’s Takeaway
Connect on Telegram

Footer

CoinLaw Logo

Bringing Finance Closer to You.

Connect With Us

Follow Us on Google News

Editorial & Trust

  • About
  • Publishing Principles
  • Fact-Check Policy
  • Corrections Policy
  • Ethics Policy
  • Disclaimer
  • Cookie Policy

Worth Checking

  • Best Cloud Mining Platforms
  • Millennial vs. Gen Z Banking
  • Ethereum Gas Fees Statistics
  • Binance vs. Coinbase Statistics
  • Zelle vs. Venmo Statistics
  • Traditional Banks vs. Neobanks
  • Crypto Exchange Hack Statistics
Contact Us
13570 Grove Dr #189,
Maple Grove, MN 55311,
United States
10β€―a.m. – 6β€―p.m. | Every day

Copyright Β© 2024–2026 CoinLaw. All Rights Reserved. Powered by the HODL Force ❀️

  • Privacy Policy
  • Terms
  • Accessibility Statement
Manage your privacy

To provide the best experiences, we and our partners use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us and our partners to process personal data such as browsing behavior or unique IDs on this site and show (non-) personalized ads. Not consenting or withdrawing consent, may adversely affect certain features and functions.

Click below to consent to the above or make granular choices. Your choices will be applied to this site only. You can change your settings at any time, including withdrawing your consent, by using the toggles on the Cookie Policy, or by clicking on the manage consent button at the bottom of the screen.

Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Statistics

Marketing

Features
Always active

Always active
  • Manage options
  • Manage services
  • Manage {vendor_count} vendors
  • Read more about these purposes
Manage options
  • {title}
  • {title}
  • {title}
Manage your privacy
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Statistics

Marketing

Features
Always active

Always active
  • Manage options
  • Manage services
  • Manage {vendor_count} vendors
  • Read more about these purposes
Manage options
  • {title}
  • {title}
  • {title}
Company
  • About Us
  • Our Team
  • Our Mission
  • Core Values
Discover
  • glossary icon
    Glossary
  • Stats
    Stats Research Process
  • Brand Guide Icon
    Brand Assets
Categories
  • Cryptocurrency
  • Payments
  • Banking
  • Finance
  • Insurance
Cryptocurrency
How Many Bitcoins Are There
How Many Bitcoins Are There 2026: Growth and Circulating Supply
Bitcoin All-Time High Statistics
Bitcoin All-Time High Statistics 2026: Every Cycle Peak Across Four Halvings
Crypto Market Capitalization Statistics
Crypto Market Capitalization Statistics 2026: Totals, Dominance, and Trends
How Many People Use Cryptocurrency Worldwide
How Many People Use Cryptocurrency Worldwide 2026: Global User Count by Year and Region
Stablecoin Market Cap Statistics
Stablecoin Market Cap Statistics 2026: Issuer Share and Growth
Coinbase vs Kraken Statistics
Coinbase vs Kraken Statistics 2026: Volume, Fees, Licenses
Payments
Remittances By Country Statistics
Remittances by Country Statistics 2026: Inflows and Cost
Cash App vs Zelle Statistics
Cash App vs Zelle Statistics 2026: Speed, Limits and User Data
Venmo vs. PayPal Statistics
Venmo vs PayPal Statistics 2026: Users, Fees and Volume
Toast Statistics
Toast Statistics 2026: ARR, GPV & Revenue Data
Rapyd Statistics
Rapyd Statistics 2026: TPV, Valuation & Licences
Marqeta Statistics
Marqeta Statistics 2026: TPV, Revenue and Customer Mix
Banking
The 15 Largest Banks in the US
The 15 Largest Banks in the US in 2026: By Assets, Deposits, and Branches
N26 Statistics
N26 Statistics 2026: Customers, Deposits, Revenue and the BaFin Growth Cap
Revolut vs Monzo Statistics
Revolut vs Monzo Statistics 2026: Customers & Profit
Islamic Banking Statistics
Islamic Banking Statistics 2026: Assets, Growth, and Top Markets
Credit Union Statistics
Credit Union Statistics 2026: Assets, Members, Loans
Banking API Statistics
Banking API Statistics 2026: Market Size, Adoption, and Growth
Finance
Emergency Fund Statistics
Emergency Fund Statistics 2026: How Much Americans Have Saved (and How Much They Should)
Financial Advisor Statistics
Financial Advisor Statistics 2026: Headcount, AUM, and Demographics
Wealth Inequality Statistics
Wealth Inequality Statistics 2026: Hidden Wealth Divide
Blockchain In Supply Chain Finance Statistics
Blockchain in Supply Chain Finance Statistics 2026: Trade Breakthrough
Blockchain In Healthcare Finance Statistics
Blockchain in Healthcare Finance Statistics 2026: Cost Breakthrough
AI-Powered Robo Trading Statistics
AI-Powered Robo Trading Statistics 2026: Big Insights
Insurance
Lemonade Insurance Statistics
Lemonade Insurance Statistics 2026: Customers, In-Force Premium, Loss Ratio, Pet & Auto Segments
Chubb Statistics
Chubb Statistics 2026: Powerful Data Insights
Virtual Reality In Insurance Statistics
Virtual Reality In Insurance Statistics 2026: Innovations, Risks, and Opportunities
US Life Insurance Industry Statistics
US Life Insurance Industry Statistics 2026: Growth Facts
US Auto Insurance Industry Statistics
US Auto Insurance Industry Statistics 2026: What You Must Know Now
UK Insurance Industry Statistics
UK Insurance Industry Statistics 2026: Growth Data
Categories
  • Cryptocurrency
  • Investments
  • Fintech
  • Compliance
  • Finance
Cryptocurrency
India S Tax Arbitrage Drives Crypto Into Unregulated Futures
India’s Tax Arbitrage Drives Crypto Into Unregulated Futures
Metamask Marks 10 Years Unveils Open Money Platform
MetaMask Marks 10 Years, Unveils Open Money Platform
Confirmo Launches Stablecoin Subscriptions
Confirmo Launches Stablecoin Subscriptions With On-Chain Caps
South Korea Schedules 2027 Cbdc Bond Tokenization Pilot
South Korea Schedules 2027 CBDC Bond Tokenization Pilot
Coinbase Prime Gets 250 Million In Seized Us Bitcoin
Coinbase Prime Gets $250 Million in Seized US Bitcoin
Bolivia Weighs Adding Usdt To Its National Payment System
Bolivia Weighs Adding USDT to Its National Payment System
Investments
Former Tether Cio Seeks To Sell 1 26 Stake
Former Tether CIO Seeks to Sell 1.26% Stake via PJT Partners
Binance Reportedly Set To Lead Mesh S 2b Round
Binance Reportedly Set to Lead Mesh’s $2B Round
Kiwoom Chases Bithumb Stake South Korea
Kiwoom Chases Bithumb Stake as South Korea Crypto Expands
Sbi Seals 288m Bitbank Acquisition
SBI Seals $288M Bitbank Acquisition to Expand in Japan
Kraken Plans 72m Investment In Aave For A Stake
Kraken Eyes Major Aave Deal With $71M Investment Plan
Bybit Launches Pwm 2 0 For Vip2 Wealth Investors
Bybit Launches PWM 2.0 for VIP2+ Wealth Investors
Fintech
Linux Foundation Launches X402 Foundation For Ai Payments
Linux Foundation Launches x402 Foundation for AI Payments
Cleanspark Signs 20 Year 6 6 Billion Data Center Lease
CleanSpark Signs 20-Year, $6.6 Billion Data Center Lease
Bybit Skills Marketplace Launch
Bybit Launches AI Marketplace for Yield Strategies
Evernorth Launches Japanese X Account Before Nasdaq Debut
Evernorth Launches Japanese X Account Before Nasdaq Debut
Bingx Launches Visa Debit Card With Wirex
BingX Launches Visa Debit Card With Wirex For Digital Assets
Hsbc Issues First Digitally Native Structured Note
HSBC Issues First Digitally Native Structured Note
Compliance
Aba Icba Urge Senate To Close Stablecoin Yield Loophole
ABA, ICBA Urge Senate to Close Stablecoin Yield Loophole
Polymarket Files For Us Margin Trading License
Polymarket Files for US Margin Trading License
Circle Faces Criminal Complaint Over Stolen Usdc Recovery
Circle Faces Criminal Complaint Over Stolen USDC Recovery
Coinbase Wins Uk Mifid License For Stocks And Derivatives
Coinbase Wins UK MiFID License for Stocks and Derivatives
South Korea Court Proposes Crypto Seizure Rules
South Korea Court Proposes Crypto Seizure Rules
Ripple Wins Full Mica Casp License In Luxembourg
Ripple Wins Full MiCA CASP License in Luxembourg
Finance
Avax One Regains Nasdaq Listing Compliance
AVAX One Regains Nasdaq Listing Compliance
Kraken Lets Traders Post Tokenized Stocks As Collateral
Kraken Lets Traders Post Tokenized Stocks as Collateral
Kalshi Targets Ipo After Massive Valuation
Kalshi Targets IPO After Massive Growth and $22B Valuation
Coinbase To Launch Tokenized Us Stocks
Coinbase Sparks New Race With 1:1 Backed Tokenized Stocks
Bitmine Launches 300m Preferred Stock Offering
Bitmine Launches $300M Preferred Stock to Buy More ETH
Coinbase Lists Spacex Pre Ipo Perpetual Futures
Coinbase Lists SpaceX Pre IPO Perpetual Futures
Newsletter Img

Too much noise in crypto?

We respect your time. You get one high-impact briefing a week. If the market is quiet, so are we.

βœ… Join readers from Visa, Mastercard, Vanguard, and the FDIC.
Newsletter Img

The Weekly Briefing

We track the market 24/7. You get a 5-minute summary. If it’s quiet, we skip it.

βœ… Read by pros at Visa, Mastercard, Vanguard, and the FDIC.