Zerodha founder and CEO Nithin Kamath has expressed surprise at the rapid rise of crypto futures and options (F&O) trading in India, pointing to the mix of lower taxes, high leverage, and a regulatory grey zone as key reasons behind its popularity.
“I hadn’t realised how popular crypto F&O has become. These Indian crypto platforms seem to be thriving in a regulatory grey zone, and because of lower taxes and extreme leverage in derivatives,” Kamath tweeted on Tuesday, while referring to an article published by The Economic Times.
Kamath, who also shared a detailed note on LinkedIn, flagged how crypto derivatives have outpaced spot trading volumes in the country. According to industry sources, trading activity in futures now exceeds spot trades by as much as threefold on Indian exchanges.
Unlike spot markets, crypto derivatives here operate without clear regulation, enabling traders to sidestep the 1% tax deducted at source (TDS) and even avoid the steep 30% tax imposed on profits from virtual digital assets (VDAs).
The lure of crypto F&O lies largely in the leverage it offers. While stock market futures in India usually allow traders to take positions at 3-5 times their capital, crypto futures go much further often crossing 50x. On some global platforms, the leverage can even stretch to 100x. This extraordinary access, combined with relatively lighter taxation, has drawn a flood of participants.
By nature, futures are risky instruments since traders only need to put up a fraction of the trade value as margin. For many, that risk translates into the possibility of outsized gains in a short span, making it an attractive, albeit dangerous, option.
Kamath’s comments draw attention to the clear divide between India’s well-regulated stock futures market and the freewheeling world of crypto derivatives. While equity markets function under strict regulatory watch, crypto platforms are growing in an environment where the rules remain unclear.
Kamath’s remarks also highlight a shift in India’s trading behaviour. Crypto futures, fuelled by heavy leverage and tax breaks, are rising fast even as their regulatory fate hangs in the balance.
Also Read: Crypto Under Fire in Indian Parliament Panel’s Cybercrime Report
