Retail Investors Drive Crypto Boom as Trading Volumes Double
Cryptocurrency trading is experiencing a remarkable surge in India’s smaller cities, as traders seek alternative income streams amid limited job opportunities and slow wage growth. The cumulative trading volume on India’s top four crypto exchanges more than doubled in the October-December 2024 quarter, reaching $1.9 billion, according to data from CoinGecko.
This surge in interest comes despite regulatory uncertainties and steep taxes on crypto trading gains in India. Many retail investors, including small business owners and young professionals, are shifting from equity derivatives to cryptocurrencies due to recent regulatory restrictions on options trading.
India’s Tier-2 and Tier-3 Cities Emerge as Crypto Hotspots
The bulk of this growth is now being driven by smaller cities like Jaipur, Lucknow, and Pune, according to CoinSwitch, one of India’s largest crypto trading platforms. Seven of the top 10 cities propelling crypto activity in 2024 were from non-metro regions, highlighting how digital assets are penetrating beyond traditional financial hubs like Mumbai, Delhi, and Bengaluru.
Balaji Srihari, Vice President at CoinSwitch, noted:
“Growth is now being driven by non-metro cities. That’s true for the stock world, and it’s true for crypto.”
Why Indian Traders Are Turning to Crypto?
- Limited Job Growth: India, the world’s most populous country with 1.4 billion people, has struggled to generate sufficient employment opportunities despite strong GDP growth. Nearly two-thirds of the population is under 35, and many young professionals are looking for alternative income sources.
- Stricter Derivatives Trading Rules: Regulatory changes have made options trading less attractive, prompting traders to explore crypto assets as an alternative.
- Rising Global Crypto Adoption: Institutional investments, ETF approvals, and potential regulatory ease in global markets have fueled a renewed rally in Bitcoin, Ethereum, and other cryptocurrencies.
- Financial Freedom and Side Income: Many traders, like Nagpur-based flower shop owner Ashish Nagose, see crypto as a way to support their traditional businesses during off-seasons.
“I want to run my family shop, but I hope crypto trading can provide a steady income when business slows down,” Nagose explained.
Crypto Education Gains Traction in India
With rising curiosity, crypto trading academies are emerging in smaller cities, offering courses to help traders navigate the complex digital asset market.
In Nagpur, Thoughts Magic Trading Academy, run by options trader Yash Jaiswal, has tutored around 1,500 people over the past two years. The demand for training highlights how Indians are eager to learn and capitalize on crypto opportunities.
A poster in the academy reads: “You’re just one trade away from your dream life.”
India’s Regulatory Stance on Cryptocurrency Remains Unclear
Despite the growing adoption of Bitcoin, Ethereum, and Dogecoin, the Indian government has yet to formulate clear regulations for crypto trading.
- Taxation: India imposes a 30% tax on crypto trading gains, among the highest in the world.
- Lack of Regulation: Unlike other G-20 nations, India has not introduced formal crypto regulations or included crypto under existing securities laws.
- Central Bank’s Concerns: The Reserve Bank of India (RBI) continues to warn against crypto volatility and its impact on financial stability.
The RBI’s December 2024 Financial Stability Report cautioned that:
“Widespread usage of crypto assets and stablecoins has consequences for macroeconomic and financial stability.”
Outlook: Will Crypto Adoption Continue in India?
Despite regulatory uncertainty, India’s crypto trading ecosystem continues to expand, driven by young investors, tech-savvy traders, and financial influencers. Experts project that India’s crypto market could grow to over $15 billion by 2035, with an 18.5% compound annual growth rate (CAGR), according to Grant Thornton Bharat.
However, the future trajectory of crypto trading in India will depend on government policies, taxation structures, and global market trends. Until then, investors in India’s smaller cities are likely to keep exploring digital assets as a means of financial security and wealth creation.
