Zerodha’s Kamath Sounds Alarm on India’s Explosive Crypto F&O Boom Fueled by Tax Arbitrage and Leverage

India's crypto derivatives market hits fever pitch as traders chase leverage and tax advantages.

The Regulatory Arbitrage Play

Kamath spotlights how traders flock to crypto futures to bypass brutal income tax slabs—because why pay 30% on spot gains when you can book derivatives profits as business income? Classic Indian financial innovation at work.

Leverage: The Double-Edged Sword

Platforms offer up to 50x leverage, creating a generation of traders who think risk management is something you do after blowing up your third account. Volume spikes mirror 2021's bull run patterns, but with more sophisticated—and dangerous—instrumentation.

Market Structure Shifts

Derivates now dominate trading volumes, flipping the traditional crypto market model upside down. Retail participation dwarfs institutional activity, creating unprecedented liquidity but also systemic risk concerns.

Regulatory limbo continues fueling this boom—because nothing says 'healthy market' like billions in derivatives trading operating in policy purgatory. Sometimes the house wins because there isn't actually a house.