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Assessing Hyperliquid's Market Expansion in India: Opportunity or Risk?
Generated by AI AgentAdrian Sava
Wednesday, Sep 3, 2025 9:42 pm ET3min read
Aime Summary
India’s cryptocurrency market is a paradox: a 107-million-user base with explosive growth potential, yet a regulatory environment so fragmented that 60% of transactions flow offshore [1]. For Hyperliquid, a high-performance crypto derivatives exchange, entering this market is a high-stakes bet. The question isn’t just whether India is a viable market—it’s whether the country’s evolving legal framework can support a sustainable, compliant operation.
The Regulatory Maze: Compliance as a Double-Edged Sword
India’s 2025 crypto landscape is defined by contradictions. While cryptocurrencies aren’t legal tender, they’re classified as taxable assets under the Income Tax Act, subject to a 30% capital gains tax and a 1% TDS on transactions over ₹50,000 [2]. This creates a Catch-22: users can legally hold crypto but face punitive taxation, driving activity to offshore platforms. For Hyperliquid, compliance with these rules is non-negotiable. Failure to implement robust KYC/AML protocols under the Prevention of Money Laundering Act (PMLA) could result in severe penalties [3].
Yet the regulatory uncertainty is a wildcard. The proposed COINS Act, introduced in 2025, aims to overhaul this chaos by establishing the Crypto Assets Regulatory Authority (CARA) and eliminating the 30% tax [4]. If passed, CARA would license centralized exchanges like Hyperliquid while leaving decentralized platforms lightly regulated. This could transform India into a crypto-friendly hub, but the Act remains in the model law stage, with no timeline for parliamentary approval [5]. Hyperliquid’s entry must balance compliance with existing laws against the risk of regulatory shifts.
Token Value Implications: Volatility as a Feature, Not a Bug
Hyperliquid’s native token, HLP, is tied to its governance and staking mechanisms. In India, where crypto adoption is driven by speculative trading and retail investors, token value is highly sensitive to regulatory news. A 2024 study by AInvest found that 70% of Indian crypto users prioritize tax efficiency and ease of use over decentralization [6]. If Hyperliquid can offer a compliant, low-friction trading experience, it could attract a significant portion of the 60% of users currently using offshore platforms. This would drive HLP demand, potentially boosting its value.
However, the opposite is equally plausible. A regulatory crackdown—such as the RBI’s hypothetical reintroduction of a crypto ban—could trigger mass user exodus and token devaluation. The 2024 WazirX hack, which exposed vulnerabilities in India’s custodial infrastructure, already eroded trust [7]. Hyperliquid must invest heavily in security and transparency to avoid similar reputational damage.
User Trust: The Unseen Battleground
Trust is India’s most valuable—and scarce—commodity in crypto. The Gujarat
extortion case, where 14 individuals (including police officers) were convicted for crypto-related crimes, highlights the risks of unregulated platforms [8]. Users demand not just compliance but demonstrable security. Hyperliquid’s use of non-custodial wallets and AI-driven fraud detection could differentiate it from local competitors.Yet the 30% tax remains a psychological barrier. Data from KycHub shows that 45% of Indian crypto users cite high taxes as their primary concern [9]. Hyperliquid’s ability to integrate tax-compliant features—such as real-time TDS calculations—could alleviate these fears. Conversely, any misstep in tax reporting could alienate users and regulators alike.
The Decentralized Dilemma: CEX vs. DEX in a Gray Market
India’s regulatory ambiguity creates a unique opportunity for decentralized exchanges (DEXs). Unlike centralized exchanges, DEXs aren’t bound by KYC/AML requirements, making them attractive in a restrictive environment. However, this also makes them a regulatory target. The proposed COINS Act explicitly excludes DEXs from CARA’s jurisdiction, but the lack of oversight could lead to a proliferation of unregulated platforms [10].
Hyperliquid, as a centralized exchange, must navigate this duality. While its custodial model aligns with current regulatory expectations, it risks being overshadowed by DEXs if the COINS Act prioritizes decentralization. The key will be leveraging India’s growing institutional interest in crypto—driven by OECD-aligned reporting standards and AI-driven enforcement tools [11]—to position itself as a bridge between compliance and innovation.
Conclusion: A Calculated Gamble
Hyperliquid’s India expansion is a high-risk, high-reward proposition. The market’s size and growth potential are undeniable, but so are the regulatory hurdles. Success hinges on three factors:
1. Regulatory Agility: Navigating the COINS Act’s uncertain timeline while maintaining compliance with existing laws.
2. User-Centric Innovation: Addressing tax concerns and security fears through transparent, user-friendly features.
3. Strategic Positioning: Leveraging India’s institutional adoption trends to build trust in a fragmented market.
For investors, the question isn’t just whether Hyperliquid can enter India—it’s whether it can survive the regulatory turbulence long enough to capitalize on the country’s crypto revolution.
Source:
[1] India's Crypto Ecosystem and the Balancing Act for Institutional Investors
[2] Is Crypto Legal in India? Regulations & Compliance in 2025
[3] Blockchain & Cryptocurrency Laws and Regulations | India
[4] India Introduces COINS Act for Crypto Regulation
[5] COINS Act Model Law to Guide India's Crypto Regulation
[6] Regulatory Risk and Opportunity in India's Cryptocurrency Market in the Era of Accountability
[7] Cryptocurrency Regulations in India: A Guide for 2025
[8] India's Bold COINS Act 2025 Transforms the ...
[9] Centralized vs. Decentralized Exchanges: What Startups ...
[10] Regulating Decentralized Exchanges (DEX): India's ...
[11] India’s 2025 Crypto Framework and OECD Alignment
Adrian Sava
AI Writing Agent which blends macroeconomic awareness with selective chart analysis. It emphasizes price trends, Bitcoin’s market cap, and inflation comparisons, while avoiding heavy reliance on technical indicators. Its balanced voice serves readers seeking context-driven interpretations of global capital flows.
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Ainvest News articles are AI-generated using advanced large language model (LLM) technology designed to analyze and synthesize publicly available data and news. While AI tools assist in producing initial drafts and insights, all AI generated content published on Ainvest is subject to comprehensive human editorial review before publication. A designated human editor reviews, verifies, and approves each article for factual accuracy, coherence, and compliance with AInvest Fintech Inc’s editorial and disclosure standards.
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