What is Cryptocurrency?
Cryptocurrency is digital money that operates on blockchain technology, a secure, decentralized system that records transactions across many computers. Unlike traditional rupees stored in banks, cryptocurrencies like Bitcoin, Ethereum, and others are not controlled by any central authority, making them transparent and resistant to tampering.
Current Status in India
As of June 19, 2025, cryptocurrencies are gaining traction in India, despite a complex regulatory landscape. India doesn’t recognize cryptocurrencies as legal tender, but they are not banned either. The government treats them as digital assets, subject to taxation. If you trade or earn profits from crypto, you must pay a 30% tax on gains and a 1% TDS (Tax Deducted at Source) on transactions above ₹50,000, as per the 2022 Finance Act.
The Reserve Bank of India (RBI) remains cautious, citing risks like money laundering and financial instability. However, the Supreme Court’s 2020 ruling lifted the RBI’s earlier ban on crypto transactions, allowing exchanges like WazirX, CoinDCX, and ZebPay to thrive. These platforms have made it easier for Indians to buy, sell, and hold crypto using rupees.
Why Are Indians Interested?
- Investment Opportunities: Many young Indians see crypto as a high-risk, high-reward investment. Bitcoin, for instance, has risen over 50% in value in 2025 alone, attracting tech-savvy investors.
- Remittances: NRIs use crypto for faster, cheaper cross-border transfers compared to traditional banking.
- Tech Appeal: India’s growing tech workforce is drawn to blockchain’s innovation and potential to disrupt finance.
Challenges
- Regulation Uncertainty: The government is working on a crypto regulatory framework, expected in late 2025, but delays keep investors on edge.
- Scams and Fraud: Fake crypto schemes have duped many, especially new investors. Always use trusted platforms and avoid “get-rich-quick” promises.
- Volatility: Crypto prices can swing wildly. For example, Bitcoin dropped 20% in a single week in May 2025 before recovering.
How to Start Safely
- Choose a Reputable Exchange: Use RBI-compliant platforms like WazirX or CoinDCX, which support UPI payments.
- Do Your Research: Understand the crypto you’re investing in. Bitcoin and Ethereum are popular, but thousands of other coins exist, many with high risks.
- Secure Your Assets: Store crypto in a digital wallet. Hardware wallets (like Ledger) are safer than keeping funds on exchanges.
- Stay Tax-Compliant: Report all crypto gains in your Income Tax Return to avoid penalties.
The Future
India’s crypto market is expected to grow as more people adopt digital assets. The upcoming regulations could bring clarity, encouraging institutional investment. However, the RBI’s push for a Central Bank Digital Currency (CBDC), the digital rupee, might compete with private cryptocurrencies. Pilot projects for the digital rupee are already underway in major cities like Mumbai and Delhi.
Quick Tips for Indian Investors
- Start small and only invest what you can afford to lose.
- Verify exchanges for KYC compliance to avoid legal issues.
- Stay updated on government policies via trusted news sources.
Cryptocurrency in India is a blend of opportunity and caution. With the right knowledge and tools, it can be a rewarding venture for those willing to navigate its complexities.