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Opinion by: Mithil Thakore, CEO of Velar
India’s top ranking in<a data-ct-non-breakable="null" href="https://cointelegraph.com/news/global-crypto-adoption-bitcoin-etf-2024" rel="noopener noreferrer nofollow" target="null" text="null" title="null"> Chainalysis’ Global Crypto Adoption Index</a> for the second consecutive year paints a picture of heightened enthusiasm for digital assets. However, a closer examination reveals a different narrative — one where high adoption metrics do not necessarily translate to widespread, meaningful use of cryptocurrencies on the ground.
India is a country that has<a data-ct-non-breakable="null" href="https://www.pwc.in/assets/pdfs/consulting/financial-services/fintech/publications/the-indian-payments-handbook-%E2%80%93-2023%E2%80%932028.pdf" rel="noopener noreferrer nofollow" target="null" text="null" title="null"> evolved</a> to digital supremacy, where even the most underprivileged and uneducated have adapted to accept payments digitally via methods like the Unified Payments Interface. Yet, cryptocurrencies like Bitcoin (<a data-ct-non-breakable="null" href="https://cointelegraph.com/bitcoin-price" rel="noopener noreferrer nofollow" target="null" text="null" title="null">BTC</a>) are far from mainstream, even among the tech-savvy.
The fact that metrics say one thing, and reality presents a contrasting image, suggests that India stands at a paradoxical crossroads. On the one hand, India boasts impressive figures in terms of cryptocurrency adoption, potentially signaling a bright future for digital assets. On the other, the lack of practical implementations and meaningful utilization is evidence that the true economic potential of cryptocurrency remains barely realized.
<h2 id="the-mirage-of-adoption">The mirage of adoption</h2>
The mirage of adoption<a data-ct-non-breakable="null" href="https://www.chainalysis.com/blog/2024-global-crypto-adoption-index/" rel="noopener noreferrer nofollow" target="null" text="null" title="null"> presented</a> in the Chainalysis index stems from massive signup numbers that don’t translate into actual participation in the market. To fully grasp India’s crypto adoption, we must look beyond high-level metrics and examine how exchanges have contributed to inflated numbers through aggressive marketing.&nbsp;
Crypto exchanges, such as WazirX and<a data-ct-non-breakable="null" href="https://startuptalky.com/coindcx-marketing-strategy/" rel="noopener noreferrer nofollow" target="null" text="null" title="null"> CoinDCX</a>, have run extensive marketing campaigns offering users nominal amounts of cryptocurrency (e.g., $1 to $2 worth) for simply downloading their app and completing Know Your Customer (KYC) procedures.
Such aggressive marketing strategies — offering financial incentives for app downloads and KYC completion — artificially boost adoption figures without reflecting genuine interest or understanding. Additionally, remittances and informal trading networks contribute to transaction volumes without reflecting mainstream acceptance or integration into everyday financial practices.
<h2 id="the-need-for-precise-regulation">The need for precise regulation</h2>
Despite the high adoption rates, the Indian government’s stance on cryptocurrencies remains ambiguous.
Recent: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/india-expanding-cbdc-cross-border-payments-platform" rel="noopener noreferrer nofollow" target="null" text="null" title="https://cointelegraph.com/news/india-expanding-cbdc-cross-border-payments-platform">Reserve Bank of India expanding cross-border payments platform</a>
India’s journey with cryptocurrency has been turbulent, from the Reserve Bank of India’s 2018 ban on crypto dealings —<a data-ct-non-breakable="null" href="https://cointelegraph.com/news/india-supreme-court-lifts-rbi-ban-on-banks-servicing-crypto-firms" rel="noopener noreferrer nofollow" target="null" text="null" title="null"> overturned by the Supreme Court in 2020</a> — to<a data-ct-non-breakable="null" href="https://cleartax.in/s/cryptocurrency-taxation-guide" rel="noopener noreferrer nofollow" target="null" text="null" title="null"> introducing</a> a 30% tax on capital gains and a 1% tax deducted at source on crypto transactions in 2022, all without clear regulations. This regulatory ambiguity instills FUD among investors, knocking down the industry’s growth.
The Indian government should enact legislation defining cryptocurrencies’ legal status, classifying them as digital assets rather than legal tender. This distinction would provide legal certainty for investors, businesses and regulators.
For example, Switzerland has implemented its “<a data-ct-non-breakable="null" href="https://cointelegraph.com/learn/articles/an-overview-of-the-swiss-distributed-ledger-technology-dlt-act" rel="noopener noreferrer nofollow" target="null" text="null" title="null">blockchain act</a>,” which came into effect in 2021, providing a clear legal foundation for onchain assets.
India can adopt a similar approach by drafting laws addressing property rights, contractual obligations and dispute resolution mechanisms specific to digital assets.
Regulatory ambiguity is a significant hurdle in implementing decentralized finance (DeFi) in India. Assigning the Securities and Exchange Board of India (SEBI) as the principal regulator for crypto assets can clarify expectations and provide a coherent compliance framework. That would happen with the help of SEBI’s expertise in securities regulation while aligning with the “cryptocurrencies as investment assets” narrative (as opposed to a national currency).&nbsp;
<h2 id="is-there-reform-on-the-horizon">Is there reform on the horizon?</h2>
Transforming India’s “empty” cryptocurrency adoption metrics into a tangible and thriving DeFi market is where innovation lies. Without regulators’ support, digital assets will likely remain a small niche among tech-savvy geeks.
If, or when, the world adopts programmable DLT-based currency, India may be left behind if the government stays crypto-averse. While it’s not all doom and gloom, the time for Indian regulators to step forward and implement agreeable digital asset regulations has come.
The Indian government is in the process of preparing a new consultation paper on cryptocurrency regulations. This initiative comes in response to recommendations from international bodies like the International Monetary Fund, the Financial Stability Board, and the G20, emphasizing the need for global cooperation and comprehensive regulatory frameworks for crypto assets.
Investors expect the paper to go into the weeds of issues such as asset classification, taxation, investor protection and potential risks associated with cryptocurrency use. Notably, the paper would provide a better picture of the government’s stance on cryptocurrencies and possibly even a roadmap for their regulation in the country. Depending on the contents of the consultation paper and how much of that makes it to implementation, we may see rapid growth in institutional and street-level adoption.
Mithil Thakore is the CEO of Velar, which enables seamless swapping, trading and launching assets on Bitcoin L2s. He is an entrepreneur in the cryptocurrency and blockchain industry, having founded several companies, including EkBTC.in, Quillhash.com, and TeraSurge Capital.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

In India, adoption metrics don’t match on-ground reality

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