India Risks Missing Web3 Revolution Without Clear Crypto Regulations
India's lack of clear crypto regulations is causing concern among industry leaders, who fear the country could miss out on the Web3 and crypto revolution. CoinDCX CEO Sumit Gupta discusses the challenges and opportunities.
Crypto RegulationsWeb3BlockchainStablecoinsTokenisationReal EstateJun 01, 2025
In an interview with Fortune India, CoinDCX Co-founder Sumit Gupta highlighted the importance of swift regulatory and tax clarity. Without these, India risks losing talent, capital, and momentum in the crypto space.
### Bitcoin Rally and India's Position
The recent Bitcoin rally was largely anticipated, particularly following former US President Donald Trump’s re-emergence in US politics. Trump is the first US President to openly support Bitcoin and blockchain technology, which has acted as a catalyst for renewed investor enthusiasm. Developments like the proposed Genius Act in the US, which aims to create a stablecoin framework, are also driving global interest.
India, interestingly, leads the world in grassroots adoption of digital assets. The youth are particularly engaged, and digital assets have gone mainstream. While regulations remain a challenge, Gupta is optimistic. Over the next one to two years, he expects a more proactive stance from the Indian government. As global momentum builds, it becomes increasingly hard for any country to ignore this space.
### Price Movement and Investor Participation
While exact numbers are hard to predict, based on various analyst projections and sentiment trends, Bitcoin could potentially touch $150,000 by the end of the year. The rally is largely driven by institutional interest—major funds, family offices, and corporations are building long-term positions. These institutions have access to deep research and understand the long-term potential.
Retail participation in India is still somewhat constrained due to high taxation and regulatory uncertainty. However, tech-savvy individuals and younger investors are increasingly showing interest. Notably, only about 7% of Bitcoin’s total supply is currently available on exchanges, with the rest held long-term in wallets, suggesting holders are waiting for higher prices and indicating room for further upside.
### Institutional Interest in Crypto
Indian institutional investors are showing growing interest in crypto, despite regulatory hurdles. CoinDCX has responded to this demand by launching CoinDCX Prime, a specialized platform for high-net-worth individuals (HNIs), family offices, and institutional clients. The approach is to first educate, demystify the asset class, and explain the compliance and risk frameworks.
The platform has seen significant traction in the last two years. CoinDCX now has over 1,000 institutional accounts, the highest in the country. While the scale is still small compared to the US, the interest and intent are steadily growing. The team regularly travels across India, from Delhi to Kolkata, to engage with institutional clients and onboard them in a safe, compliant manner.
### Regulatory Changes and CBDCs
While clear timelines are not available, the direction is positive. The Indian government has shown a marked shift in openness towards digital assets. CoinDCX has been invited to participate in multiple government forums, where they present real-time data and user-level insights. The government understands the serious interest in this asset class, particularly among younger, tech-oriented individuals.
India is the second-largest pool of blockchain developers globally and could become the largest in the next three years. The industry has consistently communicated the ground realities to policymakers. What is still needed is a stronger public-private partnership, a framework for innovation, and a sandbox environment that allows responsible experimentation. The risks can be managed, but the opportunity must not be missed.
### Central Bank Digital Currencies (CBDCs)
Gupta has a critical view of central bank digital currencies (CBDCs). He notes that no fully successful CBDC model has been implemented globally. Countries like China and the US have been experimenting for years, but adoption has been limited. The key issue is that most CBDCs are built on private blockchains, not public ledgers like Ethereum.
The fundamental value of blockchain lies in creating trust where none exists. Private blockchains, being closed systems, do not need this trust, which defeats the purpose. For CBDCs to be successful, they must be built on public infrastructure, allowing broader participation and innovation. For example, exporting the Indian Rupee via a public INR-backed stablecoin could significantly strengthen the currency and drive global demand.
### Stablecoins and Tokenisation in Finance
Stablecoins have the potential to solve India’s remittance challenges. India is the world’s second-largest remittance recipient, receiving over $100 billion annually. However, common people lose around 5-6% in transaction fees, amounting to $5 billion in value leakage every year. Blockchain technology can cut this cost to nearly zero. The technology is ready, but what’s missing is a regulatory sandbox or framework that enables companies to build in a compliant, monitored environment. If enabled, stablecoins could completely transform cross-border payments.
Tokenisation involves converting real-world assets, like real estate or stocks, into blockchain-based digital tokens. It addresses inefficiencies. Today, buying a share takes a day to settle, and real estate is illiquid due to high ticket sizes. Tokenisation enables fractional ownership and instant settlement using blockchain. For instance, 1,000 people could invest in one property via blockchain tokens, making real estate accessible to retail investors. This model is already being implemented in the UAE, where global investors can buy as little as one square foot of land. In the next year or two, we will likely see tokenisation and stablecoins becoming major themes.
### Gulf Countries and India's Lag
Gulf countries like the UAE have become crypto hubs due to clear regulatory frameworks. This is why many Indian entrepreneurs are relocating there. CoinDCX has also expanded into the GCC region, acquiring BitOasis and now holding full licenses in both the UAE (Vara) and Bahrain (CBB). They are the largest regional player there.
India, unfortunately, is behind due to unclear regulations. If India does not act quickly, it risks losing talent and innovation. Countries like the US, UAE, Singapore, and the UK are already offering supportive environments through regulatory sandboxes. India must follow suit to remain competitive.
### Impact of 2022 Tax Policy and Financial Health
The 2022 tax policies have hurt domestic exchanges. While CoinDCX’s user base and assets under management have grown, much of the trading has shifted to international platforms due to tax arbitrage. This setup is flawed, as users pay tax only when trading on Indian exchanges.
Despite this, CoinDCX remains India’s largest exchange in terms of user base, trading volume, and assets. They have maintained a compliance-first approach and built trust over 7-8 years. They are not growing as fast as they could without the tax roadblock, but they are still progressing steadily.
CoinDCX is currently operating at break-even. They were burning capital post-2022 when volumes dropped overnight, but they have since launched new products, optimized pricing, and onboarded new users. They have a strong balance sheet and continue to reinvest profits in user education and expansion into tier-2 and tier-3 cities. CoinDCX has raised approximately $240 million, with a last-round valuation of $2.15 billion. Their investors include Bain Capital, Pantera, Polychain, B Capital, and Steadview.
### Lessons from WazirX and FTX
Incidents like WazirX and FTX have damaged the entire ecosystem. They remind us of the importance of maintaining high security and compliance standards. At CoinDCX, they invest heavily in cybersecurity and regularly publish transparency reports showing reserves and liabilities. They also maintain an insurance fund to protect customer assets.
Importantly, CoinDCX is a fully Indian entity. Their terms of service are enforceable under Indian law, so users have legal recourse. Many international platforms do not offer this protection.
### Road Ahead for India in Web3 and Crypto
India has the users, the talent, and the opportunity. What is missing is regulatory clarity. If this is addressed, India can lead the global Web3 wave. CoinDCX’s mission is to make digital assets as mainstream as stocks. Twenty years ago, stocks were not mainstream, but with education and accessibility, they became part of everyday finance. If India starts building today, it can emerge as a Web3 powerhouse in the next 3-5 years. However, if it delays, it risks missing the next big internet revolution.
Frequently Asked Questions
What factors are driving the recent Bitcoin rally?
The recent Bitcoin rally is largely driven by renewed investor enthusiasm, particularly following Donald Trump’s re-emergence in US politics and his support for Bitcoin and blockchain technology. Additionally, developments like the proposed Genius Act in the US are contributing to the positive sentiment.
How is India positioned in the global crypto landscape?
India leads the world in grassroots adoption of digital assets, with a particularly engaged youth demographic. However, regulatory uncertainty remains a challenge. Despite this, there is optimism that the Indian government will take a more proactive stance in the next one to two years.
What is CoinDCX Prime, and who is it for?
CoinDCX Prime is a specialized platform for high-net-worth individuals (HNIs), family offices, and institutional clients. It focuses on educating and onboarding these clients in a safe and compliant manner, providing them with access to digital assets.
Why are central bank digital currencies (CBDCs) built on private blockchains considered flawed?
CBDCs built on private blockchains are considered flawed because they do not leverage the fundamental value of blockchain, which is to create trust in a decentralized manner. Private blockchains are closed systems where participants already trust each other, which defeats the purpose of using blockchain technology.
How can stablecoins and tokenisation transform the financial landscape in India?
Stablecoins can significantly reduce transaction fees in remittances, while tokenisation can make real estate and other assets more accessible and liquid. These technologies can enable fractional ownership and instant settlement, addressing inefficiencies in traditional financial systems.
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