India Leads Asia-Pacific in Centralized Crypto Exchange Inflows

While India ranks third in total crypto activity behind Singapore and Australia, its volume on centralized exchanges (CEX) remains unmatched. This surge persists even as domestic platforms struggle for relevance, accounting for only 0.7% of local trading volume. Industry analysts attribute this shift to the country's stringent tax policies, specifically a 1% tax deducted at source, which has driven users toward offshore platforms that often bypass such levies.

Regulatory Pressure and Market Shifts

Compliance has become the central theme for India’s crypto sector. The Financial Intelligence Unit (FIU) recently issued non-compliance notices to 15 offshore exchanges, including WOO X and WhiteBIT, demanding they register as reporting entities. This enforcement follows a broader push to bring private over-the-counter trades and large-scale transactions under the government's anti-money laundering framework. Authorities are now mandating rigorous KYC protocols, such as live selfie verification and geolocation tracking, for all providers serving Indian customers.

Institutional and retail behavior is evolving alongside these regulations. CoinSwitch co-founder Ashish Singhal noted that users are increasingly viewing crypto as a long-term investment rather than a speculative tool, often holding digital assets alongside traditional equities and gold. This transition toward an 'accumulate' mindset is attracting older investors with larger portfolios, even as the government continues to enforce a 30% tax on crypto gains. Without a comprehensive digital asset law, oversight remains fragmented, relying on a mix of taxation, financial reporting, and persistent regulatory scrutiny.