Small Towns Embrace Crypto Trading in India

Despite strict taxation policies, small towns and cities in India are emerging as active hubs for cryptocurrency (crypto) trading and investments, according to recent media reports.

Growing Crypto Adoption

The influx of crypto investors from Tier 2 and Tier 3 cities in India indicates a positive shift in the country's attitude towards crypto. Cities like Botad, Barbaka, Jalandhar, Patna, and Guwahati are witnessing a surge in crypto enthusiasts investing in Bitcoin and memecoins.

Influence of Taxation

Despite India's non-recognition of cryptocurrencies and a 30% tax on capital gains plus a 1% Tax Deducted at Source (TDS) on crypto trades, local investors are betting big on meme coins, accounting for 13% of crypto investments. Dogecoin and SHIB are among the most popular coins traded.

Age Demographics

Individuals under 35 years of age in India are drawn to crypto investments more than any other age group. The unique appeal of cryptocurrencies has captivated the imagination of businesses and individuals alike.

Regulatory Framework

India's crypto regulatory landscape has evolved over the years. In 2021, the government proposed the Cryptocurrency and Regulation of Official Digital Currency Bill. In 2022, a tax was introduced on crypto transactions to curb speculative trading. The Prevention of Money Laundering Act (PMLA) was extended to cover Virtual Digital Assets (VDAs) in March 2023.

In 2024, the Securities and Exchange Board of India (SEBI) suggested a multi-regulator framework for crypto activities. While Bitcoin and Ethereum are legal in India, they are not considered legal tender. Despite the lack of specific regulatory guidelines, crypto trading and holdings remain legal in India.

Challenges and Opportunities

Notwithstanding India's high taxes on crypto transactions, young investors continue to express interest in crypto investments. The 30% tax on crypto trades and a 1% TDS on transactions exceeding Rs. 50,000 pose challenges. However, the Indian government is actively addressing concerns and risks within the crypto space.