India remains a major cryptocurrency market, but domestic exchanges capture only a small fraction of value flowing to centralized trading platforms, according to Chainalysis’s 2026 regional research.
Chainalysis attributed USD 88.4 billion in centralized exchange inflows to India-based users between July 2025 and June 2026, making India the largest CEX market across Central and Southeast Asia and Oceania. However, India-based exchanges reportedly received only 0.7% of exchange value, down from around 7%.
India and Brazil Show Diverging Trends
The contrast with Brazil is significant. Chainalysis reported that Brazil-based exchanges increased their share of inflows from 1.5% to 12.5%.
Brazil’s broader crypto economy recorded USD 252.5 billion in activity during the year ending June 30, despite contracting 1.6%. However, the exchange-share observations do not specify identical measurement dates, so the figures represent a descriptive comparison rather than a synchronized market-share calculation.
India’s 1% Withholding Adds Trading Friction
Tax treatment may help explain offshore exchange use, although Chainalysis does not quantify its effect.
India’s section 393 sets 1% withholding on consideration for qualifying virtual digital asset transfers paid to residents, subject to exemptions. On a liable Rs. 100,000 sale, Rs. 1,000 is withheld, leaving Rs. 99,000 immediately available before other costs.
Repeated liable sales can therefore reduce funds available for subsequent trades even when withheld amounts may later be claimed as tax credits.
CoinSwitch co-founder Ashish Singhal told Chainalysis that ‘tax friction’ helps explain offshore use, adding that foreign venues may not make the deduction. The report does not establish how much withholding contributed to the domestic-share decline.
Local Access and Competition
Indian platforms can support INR deposits through UPI and net banking, while international platforms can also use local payment rails.
According to Chainalysis, regulatory clarity, investment and stronger local offerings are possible contributors to Brazil’s expanding domestic exchange share.
Final Thoughts
India’s data highlights the difference between strong crypto participation and domestic exchange capture. Despite USD 88.4 billion in CEX inflows, local platforms received only 0.7%, leaving taxation, competition and platform offerings important to the market. This gap separates user activity from domestic platform performance.
Also Read: India Reviews Crypto Framework as Exchange Oversight Tightens
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