Unlike in most of the world, Indian crypto traders face unique challenges due to government laws and a highly restrictive tax environment. As such, it’s easy to make a mistake or two if you’re not informed about all the crypto happenings in the country.
However, some are costlier than others, and any Indian crypto trader should pay special attention to the following mistakes.
Ignoring India’s Crypto Tax Rules
This is likely the biggest mistake one can make, as since 2022, India has imposed a 30% tax on any profits made from virtual digital assets (VDAs), which include cryptocurrencies. Additionally, a 1% tax is deducted at the source for many crypto transactions that go over a certain amount.
Also, crypto losses can’t be used to lower the taxes on other income, nor can those losses be carried over to future years.
A common misconception is that tax liabilities are triggered only upon converting crypto holdings into fiat currency through a bank withdrawal. You generally trigger a tax event every time you sell or trade one crypto asset for another. Because of this, active traders can rack up a large tax bill even if their total portfolio hasn’t actually grown much.
Falling for Investment Scams and Fake Trading Platforms
Crypto scams in India are ever-present and on the rise, and they usually include fake investment platforms, guaranteed return offers, impersonation of exchanges, fraudulent Telegram groups, AI‑generated celebrity endorsements, pig butchering scams, and phishing attacks.
Victims often transfer funds under the impression they are investing in legitimate crypto products, only to lose both the funds and any way to reach the scammers.
A government report cited by Hindustan Times in January 2026 shows that crypto‑related fraud in India jumped from around 1,340 cases in 2023‑24 to over 11,700 last year, in the period from April to December. This represents a huge 773% spike, and 82% of people scammed are between 20 and 40 years old.
Leaving Large Amounts on Exchanges
Crypto traders in general (not just in India) make the mistake of thinking crypto exchanges are like banks. Even the big exchanges can get hacked (such as Binance and Bybit), become insolvent, freeze withdrawals, or face regulatory issues.
Chainalysis reported that over $3.4 billion was stolen in 2025 from the crypto industry, and a large portion of it came from exchanges.
For anything you’re holding long‑term, a good hardware wallet is a safer bet because you keep your private keys. It won’t make crypto completely risk‑free, but it does cut out the reliance on a central exchange.
Trading High-Leverage Futures Without Understanding the Risks
Many Indian traders have migrated toward perpetual futures, and crypto futures now account for approximately 80% of Indian crypto trading volume.
That said, leverage magnifies losses, and a lot of investors are taking substantially more risk than before.
For instance, when trading with 10x leverage, if the market moves against the trader by even 10%, they could lose almost their entire investment.
Buying Memecoins Without Research
Every market cycle creates a new wave of speculative tokens. Don’t make the mistake of buying a token simply because it’s trending on X or an influencer is marketing it. Also, don’t ignore tokenomics or developer liquidity, as those can give you a good idea of where the project is heading.
Recent market data depicts huge selling pressure across memecoins, $1.2 billion to be exact.
In reality, most memecoins never recover after their initial hype, and CoinGecko reported that almost 70% of Pump.fun memecoins die in less than 24 hours after their launch.
Related: How’s India Looking in the Global Crypto Regulation Race?
