High Leverage, High Stakes: Why Regulators Are Watching India’s Crypto Surge

Coinbase International has expanded the maximum leverage available for perpetual futures contracts to 50x for eligible users, according to recent announcements. This change applies to Coinbase Advanced retail users and institutional clients through the Coinbase International Exchange. The increased leverage is available in jurisdictions outside the United States where the platform operates in compliance with local regulations [1]. This move is expected to appeal to traders seeking amplified exposure to price movements in cryptocurrencies, offering a more flexible toolset for advanced trading strategies and risk management.

The adjustment aligns with a growing global interest in crypto derivatives, particularly in markets like India, where trading in futures and options has surged to volumes exceeding three times those of spot trades on local exchanges. Analysts cite factors such as leverage, rising crypto prices, and evolving regulatory frameworks as key drivers of this trend. Leverage in Indian crypto derivatives can range from 10x to 50x or more, allowing traders to magnify potential returns with smaller initial capital outlays [4]. However, the Indian regulatory environment remains complex, with authorities like the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) expressing concerns about the risks associated with high leverage, particularly for retail investors.

The increase in leverage by Coinbase International reflects a broader shift in how global crypto exchanges are adapting to market demand for more sophisticated trading tools. Platforms such as Binance and KuCoin have also secured compliance-related registrations in India, while Coinbase explores a potential re-entry into the Indian market. These exchanges are tailoring their products to fit local regulations, including stricter KYC/AML requirements and efforts to localize user experiences [4]. Nevertheless, challenges remain, including the monitoring of INR deposit and withdrawal channels and the enforcement of compliance measures to mitigate regulatory risks.

While the availability of 50x leverage may attract experienced traders, it also heightens the potential for significant losses, especially during market volatility. According to ChainCatcher, the feature is only accessible to advanced users who demonstrate a higher risk tolerance and understanding of derivative markets [1]. This aligns with broader warnings from analysts, who emphasize the importance of risk management when trading with high leverage. For example, experts from GetBit and CIFDAQ note that while derivatives offer advantages such as hedging and advanced strategies, they also require a nuanced approach to portfolio management to avoid excessive exposure [4].

The global crypto derivatives market continues to evolve, with India emerging as a key player in the surge of futures and options trading. However, the regulatory landscape remains dynamic, with potential interventions such as tax harmonization, leverage restrictions, or enhanced reporting requirements on the horizon. These measures could reshape how derivatives are accessed and used, particularly for retail traders. As the market matures, stakeholders must remain attuned to both the opportunities and risks associated with high-leverage instruments, balancing innovation with investor protection [4].

Source:

[1] ChainCatcher (https://www.chaincatcher.com/en/article/2203040)

[2] Odaily (https://www.odaily.news/en/newsflash/446455)

[3] Mitrade Insights (https://www.mitrade.com/insights/news/live-news/article-3-1082973-20250831)

[4] The Hindu BusinessLine (https://www.thehindubusinessline.com/money-and-banking/cryptocurrency/cryptos-new-hotspot-india-drives-global-surge-in-derivatives-trading/article70004313.ece)