The Rise of P2P Trading: A Shift Towards Offshore Crypto Platforms

Crypto Platform Ban Fails to Retain Traders in India

Can Crypto Tax Reforms Lure Traders Back to Indian Exchanges?

Potential Tax Revenue Losses: The Urgent Need for Policy Changes in India’s Crypto Landscape

P2P Trading Gains as Traders Turn to Offshore Platforms

In a significant shift within the cryptocurrency landscape, peer-to-peer (P2P) trading is emerging as a driving force behind the increasing migration of Indian traders to offshore platforms. According to a recent report, the number of Indian users on a leading offshore P2P platform surged by an astonishing 73% between July 2025 and April 2026, with purchase conversions skyrocketing by 3.6 times. This trend highlights a growing preference for direct transactions between users, bypassing traditional exchange order books.

The report also noted a 29% increase in INR-based P2P trading volume from April 2025 to June 2026, underscoring the rising popularity of this trading method among Indian investors. As traders seek more flexible and accessible options, P2P platforms are becoming a favored alternative.

Crypto Platform Ban Failed to Bring Traders Back

Despite the Indian government’s attempts to rein in the burgeoning crypto market by blocking 25 offshore platforms in October 2025, the strategy has not yielded the desired results. Instead of returning to domestic exchanges, traders have continued to flock to offshore platforms, further complicating the regulatory landscape.

The government’s efforts to curb trading have inadvertently fueled the growth of P2P trading, as users seek ways to navigate around restrictions. This ongoing trend raises questions about the effectiveness of regulatory measures in an increasingly decentralized market.

Will Crypto Tax Reforms Bring Trading Back to India?

The TIOL Knowledge Foundation report emphasizes the urgent need for reform in India’s crypto tax regulations to make domestic exchanges more appealing. A key proposal is to reduce the current 1% Tax Deducted at Source (TDS) on crypto transactions to a mere 0.01%. This reduction could significantly lower the upfront costs of trading while still allowing authorities to monitor transactions effectively.

Additionally, the report advocates for changes in how losses and gains are calculated, suggesting that traders should be permitted to offset crypto losses against gains and carry forward eligible losses to future years. Such reforms could potentially revitalize the domestic crypto market.

If current trends persist, offshore crypto trading could balloon to a staggering ₹15.27 lakh crore by FY 2030-31. However, with the proposed tax reforms, the Indian government could stand to gain approximately ₹1,80,814 crore in cumulative capital gains tax over the next five years.

India Could Lose More Crypto Tax Revenue Without Policy Changes

The report also warns of a looming crisis: without changes to the existing tax framework, India risks losing more crypto trading to offshore platforms. This shift could hinder authorities’ ability to track transactions and collect necessary taxes, stunting the growth of domestic exchanges.

The estimated tax shortfall is alarming, with uncollected TDS since July 2022 amounting to around ₹19,049 crore and cumulative tax losses estimated at ₹57,147 crore. The report argues that without a restructuring of crypto tax rules, the government could face significant financial losses, further complicating the already challenging regulatory environment.

As the debate over crypto regulations continues, the question remains: will the Indian government take the necessary steps to reclaim its traders and revenue, or will the allure of offshore platforms continue to draw investors away?