India’s Crypto Market Set to Expand as Smaller Cities Drive Growth

Smaller Cities Could Reshape India’s Crypto Adoption

The next phase of growth may depend less on metro trading activity and more on accessible products, clearer rules and lasting user confidence.

The adoption story is moving beyond the metros

The central development is a shift in where crypto participation is coming from. Shetty expects smaller cities to contribute to market growth, alongside better-informed retail investors and platforms that make research and compliance easier. The interview cites Chainalysis data placing India sixth on its 2026 adoption index and second in total flows, indicating significant activity even as the market faces volatility.

WazirX’s figures offer one view of that broadening. The company says nearly 80% of its Gen Z users came from outside India’s top 10 cities. Gen Z represented 72% of new investors on the platform in the first half of 2026 and 32.1% of active traders in its Youth Day report. These are platform-specific measures, not a census of the whole Indian market, but they point to a need for accessible explanations, local-language support and clear disclosures.

Renewed activity is encouraging, but durability matters

WazirX says active traders more than doubled between July and September 2026. From November 2025 to September 2026, unique depositors rose approximately 79%, while average monthly trades per active trader doubled. Around 95% of trading activity after the platform’s restart came from returning users, suggesting that existing customers have resumed participation.

That return should be read alongside the platform’s disruption. Following the July 2024 cyberattack, users faced an interruption to trading access of approximately 15 months; operations resumed in October 2025. WazirX says eligible users received funds representing approximately 85% of Approved Claims at the Scheme’s reference token pricing, followed by Recovery Token allocation in January 2026. It has also cited a move to BitGo custody and added Fireblocks security infrastructure. These steps address important concerns, but dependable service and further recovery efforts remain central to rebuilding trust.

Futures growth raises the importance of risk education

WazirX says its monthly Futures volume increased 243% between July and September after the product’s public launch in May 2026. Derivatives can expand trading choices, but they also make clear risk communication more important, particularly as younger users and people outside the largest cities join the market. The company says users are prioritising transparent costs, accessible research, reliable support and control over risk.

Shetty also points to stablecoins, payments and tokenised assets as areas broadening blockchain activity beyond trading. Whether these use cases translate into sustained Indian adoption will depend, in his view, on clear rules and commercially viable applications. For platforms, competition is therefore not only about transaction fees: security, customer support and users’ ability to understand products may influence retention.

Tax treatment and trust remain industry-wide constraints

WazirX is calling for TDS on applicable crypto transactions to be reduced from 1% to 0.01%, a review of the 30% VDA tax rate and reasonable loss adjustment within the asset class. Those are the company’s policy requests, not announced changes. Shetty argues that repeated TDS deductions can tie up working capital for active traders and liquidity providers even when the amount is creditable against tax liability.

The company also says reporting and anti-money-laundering obligations should be enforced consistently across offshore and domestic platforms serving Indian users. For the market, the broader question is whether regulation can make compliance workable while supporting transparent activity. Without that clarity, growing interest may not necessarily convert into durable participation on compliant Indian platforms.

Key Highlights

• WazirX expects smaller cities and younger retail users to contribute to India’s crypto-market growth.
• The platform says active traders more than doubled between July and September 2026.
• Nearly 80% of WazirX’s Gen Z users came from outside the country’s top 10 cities.
• Monthly Futures volume on the platform rose 243% between July and September, according to the company.
• Clearer operating rules, tax treatment and stronger security remain important to building lasting participation.

Investor Note: Rising participation figures signal interest, not assured returns or a settled recovery in confidence. Investors should weigh crypto’s volatility, product-specific risks, platform security and the possibility of regulatory or tax changes before committing funds.