According to Nithin Kamath, founder and CEO of brokerage giant Zerodha, Indian crypto trading platforms are witnessing a surge in derivatives activity. Kamath noted that the trend has continued despite the unclear regulatory atmosphere within the sector, which most financial analysts consider a “gray zone.”
Indian investors are increasingly interested in crypto
Emerging reports have revealed that wealthy individuals and businesses in India are showing significant interest in cryptocurrency investment. Record-breaking digital asset prices, easier access to trading platforms, and supportive rules in key markets have been associated with the increased interest in derivatives trading.
Notably, asset managers across India are showing increased interest in Bitcoin, funds, exchange-traded products, and advanced trading strategies. The trend reflects that cryptocurrency, in various forms, has become a significant part of most investors’ portfolios in India. Unlike in recent years, when crypto comprised a minor slice of their investments.
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Despite the existing complexities and high level of uncertainty within the sector, Kamath believes that the extra attraction for most investors towards Futures and Options in digital assets is the high leverage and low tax rates associated with these products compared to traditional markets.
SEBI mulls regulatory adjustment in equity derivatives
In the meantime, the Securities Exchange Board of India (SEBI) is planning to prolong the tenure of equity derivatives while aiming to curb gray market risks. According to Sebi chief Tuhin Kanta Pandey, the board will consult with stakeholders on ways to improve, in a calibrated manner, the maturity of derivative products so that they better serve hedging and long-term investing.
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Meanwhile, despite the lack of regulatory clarity in the Indian digital asset sector, the regulators have instituted tax rules guiding crypto transactions in the region. For instance, crypto traders are obligated to pay a 30% tax on profits from trading, selling, or spending cryptocurrency. They are also required to pay an additional 1% TDS, which is applicable on the sale of crypto assets exceeding 50,000 rupees within a single financial year.
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