India's crypto landscape evolving, with institutional entry and maturing retail trading patterns: Mudrex' Prateek Gupta

India’s crypto market is drawing a new class of participants as institutions, family offices and wealthy investors move beyond retail speculation and begin trading digital assets. The shift is being driven in part by arbitrage opportunities between tokenised gold and gold futures, with trades offering as much as 40 to 50 basis points on favourable days, according to Mudrex Business Head Prateek Gupta.

“The biggest shift that I have seen is that there are now a decent number of institutional investors or traders in India,” Gupta said in an interview to ET Markets on the sidelines of India Blockchain Week. He said the market, once almost entirely retail, now includes prop desks, family offices and large-value HNI and UHNI clients participating in spot and futures trading.

Edited excerpts from a chat:


Let’s start by discussing what all you have been doing to drive user growth at Mudrex.

Prateek Gupta: There are two things we have been doing. One thing we have always done well is investing. We have a product called Coinsets, which is essentially a mutual fund-like basket of the best crypto tokens across different themes.

It is not a new product; we have had it for years. But it has remained one of our largest acquisition drivers across market cycles. Whether it is a bull market or a bear market, the product continues to see adoption because the premise is simple: everyone wants to participate in a new asset class, but not everyone has the time to understand which are the best picks.

The second factor is the broader shift towards tokenisation. Over the last year, crypto assets have moved beyond just crypto. Real world assets such as equities, bonds and commodities are being tokenised.

We were relatively early in identifying that wave compared with other platforms in India. We offered a wide selection of tokenised assets and positioned ourselves as a tokenised-asset trading platform, rather than just a crypto exchange.

Even our booth does not say that we are a crypto exchange because crypto is not the only asset we serve. We call ourselves a tokenised-asset trading partner. We were able to do better than some of our peers because we identified this wave early.

That positioning has helped us establish ourselves in the mind of the average Indian investor as a destination for trading multiple assets in one place.

How has the Indian crypto market grown over the last two years? Have you seen rising interest from equity investors as stocks and mutual funds haven’t done well in the last two years?

Prateek Gupta: The growth has been better and more nuanced than the headline story of India being one of the largest crypto adoption markets.

Two years ago, the Indian crypto market was almost entirely retail. Institutions were not participating in crypto at all. That changed around September 2024.

The Indian equity market had been performing well until that period. Since then, the market has remained broadly flat, while several regulatory changes have also affected equity market trading. Brokers have seen a decline in trading volumes over the last two years. Some of that capital has rotated into other asset classes. We have seen commodity volumes rise, and the same diversification trend is visible in crypto.

The biggest shift has been the entry of institutional investors and traders, including prop trading desks, family offices and large-value HNI and UHNI clients. They have started participating in both spot and futures trading in crypto.

The market is now a mix of retail and institutional participants, which was not the case even two years ago.

What kind of institutions are entering the market?

Prateek Gupta: Prop trading desks are entering crypto. They are traditionally associated with equities and commodities, but they are now trading crypto as well. Prop desks and family offices are generally among the first to explore a new asset class.

Brokers, portfolio management services and alternative investment funds are regulated, so they cannot participate in the same way at present.

Read more: 80% of demand for tokenised assets come from emerging markets, says Binance’s SB Seker

What is attracting these institutions?

Prateek Gupta: There is a trade between tokenised gold and gold futures on the Multi Commodity Exchange.

Tokenised gold is one form of tradable gold, while gold futures are traded on MCX. In the case of tokenised gold, the trading platform could be an offshore crypto exchange.

This creates an opportunity to conduct arbitrage between the two markets in Indian rupees, without directly holding crypto. On good days, the arbitrage opportunity can be 40 to 50 basis points.

Institutions have started identifying this opportunity. I would say this is one of the biggest developments in crypto adoption in India.

When institutions enter a market, legitimacy follows. Eventually, regulators may also be pushed to create a clearer regulatory framework. If crypto is no longer only a retail trend, the conversation changes.

Can this be called an inflection point for institutional interest in crypto?

Prateek Gupta: It is not an inflection point by itself. Regulation will be the true inflection point.

However, institutional participation is an important building block. If institutions are not participating, there is no pressure on regulators or other market participants to have a broader discussion.

The government can continue to operate at its own pace, but institutional participation will accelerate those conversations.

Retail investors still form the core audience for crypto platforms in India. How has their behaviour changed?

Prateek Gupta: We conducted a trader survey earlier this year, and the results showed that the average Indian investor has matured.

The average holding period has increased. Investor behaviour has shifted from speculative trading towards investing. A lot of the speculative activity has reduced.

People are also moving towards systematic investment plans. They have understood that, for an asset such as Bitcoin, it is difficult to predict the price. A systematic investment plan is one way to participate in the asset class over time. SIP adoption on the platform has increased.

Another recent trend is diversification within the tokenised-asset space. There is significant activity in US stocks and gold. Silver had also seen some activity, although that has reduced. Crude oil continues to see interest because it is also a trading instrument.

Longer holding periods, systematic investing and diversification are all signs of a maturing investor.

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Is participation also increasing among older investors?

Prateek Gupta: The market is still largely led by people in their 20s and early 30s. There is participation from people above 40, but their share remains relatively small compared with younger investors.

That is expected with any new technology. Early adopters tend to be younger people.

An interesting trend is visible in family offices. The younger generation is often responsible for identifying new asset classes and innovations. These younger members are now bringing crypto and tokenised assets to family-office investment discussions.

Regulation and taxation remain the biggest challenges. What changes would help the industry?

Prateek Gupta: There are two aspects: what the industry wants and what kind of regulation would meaningfully support growth.

Taxation is one area. I understand the use of tax as an instrument for reporting and preventing money laundering. But it can also be designed in a way that serves both purposes without being predatory towards investor behaviour.

The second aspect is investor protection. In India, capital preservation is extremely important, even when people are investing small amounts.

The regulatory framework should focus on investor protection and grievance redressal. That would reduce the initial anxiety around scams and platform-related risks.

For any new technology to achieve mass adoption, the government has to provide clarity on whether it is approved, how grievances will be addressed and what investor protection mechanisms are available.

The growth of the mutual fund industry is partly linked to the confidence created by regulatory and investor protection frameworks. A similar framework does not currently exist for crypto.

The industry can also contribute to such a framework. We are not saying the government has to fund an investor protection mechanism. The industry can come together and create one.

For institutional investors and family offices, this is particularly important. They want clarity on what happens to their capital if something goes wrong with a platform. Registration with a financial intelligence authority has to mean something in the minds of large investors.

At the same time, I understand why the government is taking time. This is a complex technology, and regulators need to understand its risks and nuances before creating a framework.

I have seen two positive developments. One was a roundtable organised by the Reserve Bank of India on asset tokenisation. The RBI invited market participants to discuss and explain the technology, along with its benefits and risks.

It was one of the best industry dialogues I have seen. It showed that regulators are not merely looking to regulate the sector; they are actively trying to understand it.

The second development was the launch of a self-regulatory body by the Bharat Web3 Association. It shows the industry’s willingness to self-regulate if a formal regulatory framework is not yet in place.

How should investors think about crypto as part of asset allocation?

Prateek Gupta: BlackRock is recommending a 3% to 5% allocation to Bitcoin and crypto for institutional investors. I would echo that view.

For someone starting their asset diversification journey, even a 3% allocation can be a starting point. As investors become more familiar with the asset class, they may increase their allocation.

For sophisticated investors, an allocation of up to 10% would not be unreasonable.

What kind of allocation are Indian institutions and family offices currently making?

Prateek Gupta: From what I have seen, the allocation is currently around 1% to 3%.

It is still below the level we would want to see, but it is a healthy start. Around 80% of this allocation is in Bitcoin.

That is a positive sign because institutions are not simply chasing hype. They believe in the broader premise of Bitcoin and decentralised finance. Bitcoin constitutes the overwhelming majority of their crypto allocation.