Growing Crypto Adoption Challenges India's Restrictive Stance

India's cryptocurrency community is expanding rapidly despite heavy taxation, with industry leaders predicting user demand will compel regulatory changes. Sujal Jethwani, a prominent crypto educator with 400,000 followers, told Cointelegraph that traditional investors are migrating to digital assets in unprecedented numbers. "The government's suppression tactics through taxation won't work long-term," Jethwani stated during the Binance Crypto-Powered Tour in Bhutan.

The "Suppressed Spring" Effect

Jethwani described India's crypto landscape as a compressed spring ready to rebound. Current regulations impose a 【30% flat tax】 on virtual digital asset profits and 【1% TDS】 on transactions exceeding $115. While these measures initially slowed trading, activity has rebounded to pre-tax levels according to exchange data. Notably, a June proposal by ruling party spokesperson Pradeep Bhandari for a national Bitcoin reserve pilot signals growing political awareness.

Market Forces Versus Bureaucratic Hesitation

——"Stock and forex traders are switching to crypto in waves,"—— Jethwani observed, noting platform user growth exceeding 200% year-over-year. This surge comes despite the absence of comprehensive regulations, creating what analysts call a "regulatory paradox." Industry projections suggest crypto adoption could reach 【17 million users】 by 2026, potentially forcing policymakers' hands.

Global Context and Local Realities

India's approach contrasts sharply with neighboring Bhutan, which has embraced crypto mining. The discrepancy highlights Asia's fragmented digital asset policies. While Indian authorities historically move cautiously on financial innovation—witness the decade-long UPI payment system development—crypto's borderless nature may accelerate decision-making timelines this time.

The Path Forward

Three factors could drive change: mounting user pressure, tax revenue potential from regulated markets, and geopolitical competition. With the US approving Bitcoin ETFs and Dubai establishing crypto hubs, India risks losing its fintech leadership position. As Jethwani concluded: ——"When millions start voting with their wallets, policymakers will have to listen."——