India recorded $88.4 billion in inflows to centralized cryptocurrency exchanges (CEX) between July 2025 and June 2026. A Chainalysis report ranked this figure as the highest CEX inflow in the Central and Southern Asia and Oceania (CSAO) region, surpassing both Singapore and Australia.
However, these heavy exchange deposits contrast sharply with India’s total crypto activity, which reached just $135 billion. That figure places India third in CSAO, trailing Singapore’s $284 billion and Australia’s $173.1 billion. India’s broader crypto economy even contracted by 14.7%, posting one of the steepest declines in the CSAO region during global bear market conditions.
Tax Burdens and the Decline of Domestic Exchanges
Domestic Indian platforms now account for just 0.7% of total exchange volume, far below the CSAO domestic average of 7%. Trading volume on local Indian exchanges has continued to tumble since early 2022 under the weight of tax regulations that have dampened investor interest.
The Indian government levies a 30% tax on crypto profits and a 1% tax deducted at source (TDS) per transaction. This rule mandates that domestic platforms deduct TDS on every trade, whereas offshore platforms are not bound by the same requirement, driving traders to shift their volume abroad.
Regulator’s Hardline Tactics Pressure Offshore Exchanges
To track funds moving to foreign platforms, India’s Financial Intelligence Unit (FIU) issued non-compliance notices to 15 offshore crypto exchanges last September. Platforms including Weex, Blofin, WOO X, and WhiteBIT were among the recipients of these warnings.
Enforcement action against foreign entities previously hit Binance, which was compelled to register with the FIU and pay a 188.2 million rupee fine. The crackdown expanded in June 2026, when the FIU required at least three major exchanges to submit records of over-the-counter (OTC) transactions exceeding $10,000 dating back to January 2026. The Indian government also broadened its international tax reporting framework in August to track transactions involving specific crypto assets and CBDCs.
Who Is Buying During the Downturn?
Amid the market contraction, investors aged 35 and older have begun entering exchanges, bringing larger capital portfolios.
Mudrex CEO Edul Patel confirmed this demographic trend, noting a shift in user behavior from quick trading to asset accumulation. CoinSwitch co-founder Ashish Singhal observed that Indian investors now treat crypto purely as an investment vehicle with a buy, hold, and sell approach.
Reported via crypto.news.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
