Is Crypto Futures Trading Legal in India? 2025 Compliance Guide
Is crypto futures trading legal in India? Crypto futures trading is permitted in India, but with clear rules to follow.
While crypto isn’t legal tender, futures trading isn’t banned outright. Instead, it falls under FIU-IND and PMLA rules, with a heavy tax framework (30% on profits + 1% TDS). This guide breaks down everything you need to know about legality, taxes, compliance, and safe trading in 2025.
Crypto Futures Trading is Legal, but Crypto is Not Legal Tender Yet
The word “legal” often creates confusion in India’s crypto community. Many investors assume that if crypto is not “legal tender,” then trading is illegal. That is not true.
Crypto is not legal tender in India yet: This means you cannot use Bitcoin to buy coffee or settle your rent. The rupee is the only legal tender in India.
But crypto trading is not banned.
Is Crypto Futures Trading Legal in India? 2025 Guide to Rules, Taxes & Compliance
In March 2023, the Indian government took an important step by bringing Virtual Digital Assets (VDAs) under the Prevention of Money Laundering Act (PMLA).
From that moment, crypto exchanges, wallet providers, and brokers had the same responsibilities as financial institutions. They must verify users through full KYC, monitor transactions, and report suspicious activity.
Oversight comes from the Financial Intelligence Unit – India (FIU-IND). Registered platforms are obligated to:
Collect PAN, Aadhaar, and bank details before onboarding users.
Monitor unusual transaction sizes or patterns.
File Suspicious Transaction Reports (STRs) to FIU-IND when necessary.
The government’s approach is clear: crypto is not recognized as money, but it is treated as a regulated asset class subject to compliance and taxation.
Is Crypto Futures Trading Legal in India? Current Status
Yes, you can legally trade crypto futures in India, as long as you do it through FIU-IND-registered and compliant exchanges.
Crypto futures differ from spot trading. Instead of directly buying Bitcoin or Ethereum, they let you speculate on price movements or hedge your holdings using contracts.
While equities and commodities futures are regulated by SEBI, crypto futures currently operate in a separate framework. There isn’t a SEBI-approved crypto derivatives market yet, but that doesn’t make them illegal. Under India’s rules, trading is permitted on compliant platforms as long as users follow PMLA guidelines.
Most futures available today are perpetual contracts, meaning they don’t expire. Instead, funding fees are exchanged every few hours to keep the price close to spot. Settlement can happen in INR (on Indian platforms) or stablecoins like USDT/USDC (on global platforms). Like all derivatives, futures require margin deposits, and positions can be liquidated if those margins fall too low.
The bottom line: crypto futures trading in India is legal, accessible, and growing — as long as you stick to the right platforms and follow the rules.
Before using a platform for crypto futures, Indian investors should check:
Whether the exchange is FIU-IND registered.
Whether it deducts the mandatory 1% TDS.
Whether it clearly explains margin, leverage, and liquidation rules.
Red flags to avoid include exchanges that skip KYC, offer extremely high leverage (like 100x), or do not explain how taxes are handled. Such platforms may be risky, and many offshore, non-compliant sites are already geo-blocked for Indian users.
Taxes on Crypto Futures Trading in India
The Indian government has a very clear stance on Crypto Taxation: All Cryptocurrencies are classified as Virtual Digital Assets, and profits will be taxed heavily.
Under Section 115BBH of the Income Tax Act, all profits from crypto trades, including futures, are taxed at a flat 30% rate. You cannot claim deductions for expenses (like internet or brokerage fees).
Trading futures is not the same as holding coins in a wallet. It comes with high risks, especially because of leverage.
Every futures trade requires a margin deposit. If the market moves against your position, your margin decreases. Once it falls below the required maintenance margin, the exchange issues a margin call. If you fail to top up, your position is liquidated automatically.
Liquidation means your position is force-closed, often at a loss. The higher the leverage, the closer the liquidation price is to your entry price. For example, with 10x leverage, even a 10% move against you wipes out your margin.
Some exchanges also use Auto-Deleveraging (ADL) to protect the system during extreme volatility. In such cases, profits from winning traders may be reduced to offset systemic losses.
To manage risks:
Stick to low leverage (2x–5x).
Always set stop-loss orders.
Diversify instead of betting everything on one trade.
Trade only with money you can afford to lose.
Conclusion
So, is crypto futures trading legal in India? Bottom line, yes. Crypto futures are regulated assets under PMLA, with clear tax obligations. This gives traders the confidence to participate while protecting the financial system.
Crypto isn’t yet a legal tender in India, but the good news is—you can trade crypto futures legally if you follow the rules:
Trade on FIU-IND-registered platforms for full compliance.
Enjoy the upside while paying 30% tax on profits and 1% TDS on trades.
Keep your records clean and file taxes correctly to stay worry-free.
Stay ahead—regulations are evolving, and India is steadily opening doors for responsible crypto participation.
To dive deeper into crypto, check Mudrex Learn’s crypto tax guide.
FAQs
Is crypto F&O trading legal in India? Yes. It is not banned, but must be done on FIU-IND compliant platforms.
How to trade crypto futures in India legally? Choose an FIU-IND registered exchange, complete KYC, pay taxes, and ensure TDS is deducted.
Which crypto trading is considered “legal”? Spot and futures trading are legal. Using crypto as currency is not.
Do crypto futures have expiry? Yes, dated futures expire monthly or quarterly. Perpetual futures do not expire.
How is crypto futures trading taxed? 30% tax on profits under Section 115BBH and 1% TDS under Section 194S.
What is 1% TDS and how do I claim it? Exchanges deduct it automatically. It reflects in Form 26AS and can be adjusted when filing ITR.
Can I set off crypto futures losses? No. Losses from crypto cannot be set off against other income.
Is crypto legal tender in India? No. Only the rupee is legal tender. Crypto is treated as a digital asset.
Siri is a writer venturing into the exciting realms of blockchain technology, cryptocurrency, and decentralized finance (DeFi), eager to explore the transformative potential of these innovations. She brings a unique perspective that bridges traditional industries and cutting-edge technology, often infused with a touch of humor through memes. She has a rich background in real estate and interior design, having previously contributed to NoBroker, where she crafted blogs and assets on these topics.
