India's crypto market has a Futures problem: Why volume is not the same as maturity

One topic increasingly dominates conversations about India's crypto market: Futures turnover. It is easy to see why. Turnover is visible, easy to compare, and is often treated as a direct measure of investor interest. Yet it answers only one question: 'how much was traded?' It does not reveal how many investors participated, how much capital they committed, or how long they remained in the market.

Scale as an indicator

India has already demonstrated the scale of its crypto participation. Chainalysis placed the country first overall and in all four components of its 2025 Global Crypto Adoption Index, spanning retail, institutional, centralised, and decentralised activity. But the index measures adoption and not the quality of the domestic market. It cannot tell us whether Indian order books have sufficient depth, customer assets are held transparently, or leveraged products are supported by adequate risk controls.

That limitation becomes particularly important when Futures turnover is cited as evidence of market maturity. Futures turnover is notional. At 10x leverage, Rs 1 lakh of margin can create Rs 10 lakh of exposure. If positions are opened and closed repeatedly, the same capital can produce several multiples of reported turnover. This is not an argument against derivatives. Futures enable hedging, price discovery and short exposure. The issue is the conclusion being drawn from their volume.

Common format reporting

To understand what Futures turnover represents, it must be read alongside the number of active traders, the margin actually committed, open interest, the concentration of activity among large accounts, holding periods, and liquidation rates. India does not publish a national dataset covering these indicators. Crypto exchanges are not officially mandated to report them in a common format. Until such disclosures become standard, rising Futures volume cannot be treated as reliable evidence of market maturity.

India's regulated equity derivatives market offers a caution, although it is not a direct proxy for crypto. SEBI found that 93% of individual F&O traders lost money between FY22 and FY24, with aggregate losses exceeding Rs 1.8 lakh crore. The lesson is not that derivatives are inherently unsuitable for retail investors. It is that enormous turnover and poor investor outcomes can coexist.

Health of spot market is key

The health of the spot market must therefore remain part of the assessment. Deep spot order books permit sizeable transactions without severe price distortion and anchor dependable price discovery. They also support direct ownership and longer holding periods. Useful disclosures would include bid-ask spreads and slippage for standard order sizes, rather than spot turnover alone.

Tax policy affects this foundation. Income from VDA transfers is taxed at 30%, before applicable surcharge and cess. Eligible transfers attract 1% TDS, while losses cannot be set off against other income or carried forward. These provisions provide traceability. The policy objective should be to preserve transaction-level traceability while ensuring that legitimate activity and liquidity remain on compliant Indian platforms. This is central to the Futures debate: rising derivatives turnover is a poor measure of maturity if the transparent domestic spot market is steadily losing depth.

Onshore participation is also not synonymous with investor protection. As of March 9, 2026, 54 VDA service providers were registered with FIU-IND, while takedowns had been directed against the applications or URLs of 53 non-compliant providers. The same parliamentary reply made an important qualification: FIU registration is not a licence, government endorsement or assurance of recourse against fraud or loss.

Next stage

That gap defines the next stage of development. Exchanges should independently verify customer assets against liabilities, segregate customer holdings from operating capital, and publish clear custody and withdrawal policies. Market-wide reporting should track 90- and 180-day retention, leverage distribution, liquidation incidence and complaint-resolution times. Those indicators show whether participation is surviving beyond a burst of trading activity.

Actual measure

Futures have a legitimate place in India's crypto market and can improve its efficiency. Rising turnover, however, should be treated as one indicator rather than a verdict on maturity. The stronger test is whether activity remains compliant and onshore, spot liquidity is dependable, custody is verifiable, and investors have meaningful safeguards when something goes wrong.

(Vikram Subburaj is CEO at Giottus.com)

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