Regulators Tiptoe as India Leads Global Crypto Adoption Despite Hesitation

Indian Union Minister Jayant Chaudhary has drawn public attention for reporting digital asset holdings worth $25,500 (₹21.31 lakh), marking a 19% increase compared to the previous year. His spouse, Charu Singh, disclosed $26,800 (₹22.42 lakh) in crypto, a 18% annual rise. Both attributed their holdings to personal savings, though no specific tokens were identified. This marks the second consecutive year a cabinet member has reported such assets, highlighting the ongoing tension between grassroots demand and regulatory uncertainty in India.

India remains at the top of the 2025 Global Crypto Adoption Index by Chainalysis, reflecting strong retail demand despite regulatory hesitancy. However, the Reserve Bank of India (RBI) has warned that formalizing regulation could "legitimize" the sector and introduce systemic risks. A recent survey by Mudrex showed 93% of respondents in favor of regulation, while 84% criticized the 30% flat tax on crypto gains as unfair compared to the 12.5% rate for equities. Industry leaders argue this tax disparity is deterring investment and stifling innovation.

Government documents reviewed by Reuters indicate regulators continue to tread cautiously with comprehensive legislation, concerned that widespread stablecoin usage might undermine the Unified Payments Interface (UPI), a critical payment system in the country. Despite these challenges, Indian crypto adoption remains robust, with an estimated $4.5 billion in digital assets held by citizens. Experts suggest a clear regulatory framework could help prevent capital flight and retain talent within the domestic market. Executives from firms like Polygon Labs have called for smart regulation that aligns India with global standards, including tax clarity and licensing norms.

Meanwhile, global crypto markets continue to experience significant capital flows, particularly in U.S. spot Bitcoin and Ethereum ETFs. In June 2025, Bitcoin ETFs recorded $4.7 billion in inflows over a 15-day period, with BlackRock’s iShares Bitcoin Trust (IBIT) leading the surge by attracting $3.77 billion in the past two weeks. This brought its total assets under management to $74.89 billion, illustrating strong institutional demand. The ETFs’ growing influence is reshaping BTC-USD market dynamics, with U.S. spot Bitcoin ETFs now holding $134.11 billion in net assets, or 6.27% of Bitcoin’s total market cap.

Ethereum ETFs also saw gains, albeit less dramatic than their Bitcoin counterparts. In the same period, Ethereum ETFs recorded $283.4 million in inflows for the week of June 24–28, marking the seventh consecutive week of gains. BlackRock’s ETHA led the inflows with $232.9 million, while Fidelity’s FETH added $67.4 million. Smaller players like Bitwise’s ETHW and 21Shares’ CETH also contributed to the surge. Grayscale’s Ethereum Trust (ETHE), however, posted a $25.3 million outflow, the only negative movement in the Ethereum ETF complex.

The growing inflows into Bitcoin and Ethereum ETFs highlight a broader trend of institutional adoption in the crypto space. These products have brought traditional investors into the market, enhancing liquidity and contributing to more efficient price discovery. While Bitcoin’s price has yet to break past its all-time high near $110,000, the ETF-driven buying pressure has outpaced miner issuance and offset most long-term holder outflows. Analysts suggest that the divergence between ETF inflows and spot price stagnation could signal a medium-term breakout, particularly if leverage unwinding and macroeconomic caution subside.

The interplay between institutional adoption and regulatory uncertainty in India contrasts with the global trend of growing acceptance of crypto through ETFs. While India’s regulatory approach remains cautious, the country continues to rank among the top adopters of digital assets globally. A clear regulatory framework, tax reforms, and alignment with international standards could help India harness the potential of crypto while mitigating risks.