Report: 72% of India’s crypto trading moved offshore in FY25

Over 72 percent of trade volume in India’s bitcoin business moved to offshore exchanges in FY25, rather than disappearing. The shift was driven by tax regulations, which encouraged traders to look for simpler options abroad rather than by hype or crashes. A survey released on 29 January by crypto tax compliance platform KoinX revealed this trend.

Indian traders generated nearly Rs 51,252 crore in crypto trading volume, but much of it shifted from domestic exchanges to offshore platforms. The market is largely driven by retail participants, who are quick to adjust their behaviour when transaction costs rise, with tax burdens pushing many to seek alternatives outside India.

Key findings from KoinX FY25 analysis

In FY25, more than 72 percent of India’s crypto trading volume took place on offshore exchanges, marking a significant shift in where activity occurs. The analysis, based on data from over 670,000 users across FY24 and FY25, shows a clear pattern of traders moving away from domestic platforms and highlights how behaviour has changed at scale.

Why Indian crypto traders moved offshore

Due to tax regulations that apply to all transactions, regardless of profit or loss, Indian cryptocurrency traders relocated abroad in FY25. For regular traders in particular, the 1 percent TDS on every sell order caused ongoing frustration. While offshore platforms offered more seamless execution and continuous trading without frequent deductions or capital lock-ups, domestic exchanges also saw less liquidity, which increased slippage.

The existing cryptocurrency tax system in India levies a 1 percent TDS on each transaction, which reduces liquidity and makes frequent trading costly. Additionally, traders pay full tax on profits even if they experience losses elsewhere, because gains are taxed at 30 percent without the ability to offset losses.

Our Year-End Report for Indian Crypto Tax FY 2024–25 is now LIVE.

We derived insights from ₹70,000+ Cr in user trading volume.

Here Are The Key Highlights:

1) KoinX users alone paid ₹130+ Cr in crypto TDS (over 25% of India’s total).

2) ₹38.52 Cr was over-collected as TDS… pic.twitter.com/qplAJufSSU

— KoinX (@getkoinx) January 29, 2026

What’s numbers reveal

In FY25, Indian crypto traders saw profits of about Rs 6,394 crore but also losses of Rs 4,781 crore across different types of trades, showing how volatile the market can be. Despite overall net losses of more than Rs 1,100 crore, they still paid around Rs 180 crore in capital gains tax—tax charged on profits that were later erased, leaving many feeling the system is unfair.

As per report in FY25, crypto TDS collections totalled Rs 511.83 crore, with over a quarter of this coming from a small group of users. Fewer than 5 percent of traders accounted for most of the payments, showing that the burden fell mainly on active participants, while casual users contributed very little.

How offshore exchanges benefited from India’s tax policy

In FY25, offshore exchanges gained popularity among Indian traders due to their lack of automatic TDS deduction, which reduced the immediate impact on trading activities. These platforms were perceived as providing greater flexibility, enabling traders to manage compliance without the continuous strain of money being depleted on every transaction, even though they were not tax-exempt.

Several global exchanges registered with India’s Financial Intelligence Unit (FIU) to restart services, but this step did little to ease the tax burden. Enforcement remained uneven across platforms, leaving many traders with the impression that offshore exchanges were simpler to use.

Behavioural shifts among Indian crypto traders

Many Indian cryptocurrency traders switched to futures and margin trading in FY25, where efficiency is important but the effects of TDS are more pronounced. Funds were swiftly transferred overseas for active trading, and domestic markets were frequently utilised simply as entry points. This transfer of volume abroad also meant a loss of innovation, data, and tax income at home, while India missed the chance to establish a stronger local ecosystem that could have supported start-ups, jobs, and fintech growth under clearer laws.

What tax reform could mean

Local platforms would become more appealing once again as a result of tax reforms that lessen the burden on traders and contribute to the restoration of liquidity on domestic exchanges. A more equitable structure would promote compliance without alienating individuals. Dependence on offshore exchanges is likely to persist in the short term, but in the long run, clearer regulations could either make India a major participant in the global cryptocurrency industry or keep it on the sidelines.