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1,200+ web3 startups, billions in investment, yet zero regulatory clarity — how long can India’s blockchain industry survive without clear rules?
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India’s web3 boom
A few years ago, India’s blockchain scene was a playground for retail traders testing the waters with crypto assets. Today, it’s a different story.
The India Web3 Landscape Report 2024, published by Hashed Emergent, unpacks key shifts in startup funding, enterprise adoption, developer activity, and regulatory trends, offering a clearer view of how the industry has matured.
One standout insight is India’s unrivaled position in crypto adoption. For the second year in a row, the country has topped the global rankings, according to Chainalysis, reinforcing its role as a major force in the digital asset economy.
The startup ecosystem has played a huge part in this growth. Investment has flowed heavily into core blockchain infrastructure and financial services, while entertainment-driven sectors — such as web3 gaming and digital collectibles — have struggled to secure fresh capital.
But momentum alone doesn’t guarantee smooth sailing. Scaling beyond the early stages remains an uphill battle, as access to large-scale funding continues to be a hurdle.
Many Indian founders have turned to international web3 funds and alternative financing models, such as token crowd sales, to stay afloat.
Regulatory uncertainty adds another layer of complexity. High crypto taxes and stringent anti-money laundering rules have pushed some startups to set up operations offshore, seeking friendlier jurisdictions.
So, where does India’s web3 ecosystem stand? To answer that, we’ll break down the report’s findings, examining investment trends, enterprise adoption, developer activity, and the regulatory forces shaping the country’s blockchain future.
Big money returns, but not for everyone
After a period of cautious investor sentiment, Hashed Emergent’s report highlights a sharp rebound in funding, with blockchain startups securing $564 million in 2024 — a 109% surge from the previous year.
The recovery follows a slowdown in 2022 and 2023 when regulatory uncertainty and global market conditions tempered investor enthusiasm.
India now hosts over 1,200 web3 startups, spanning decentralized finance, blockchain infrastructure, and entertainment. While total funding in the space has crossed $3 billion till date, investment patterns have shifted.
Infrastructure projects have emerged as the top priority, attracting the lion’s share of new capital — a sign that investors are betting on blockchain’s foundational layers rather than speculative applications.
Infrastructure-focused startups raised $437 million in 2024, marking a staggering 224% increase from 2023. Much of this funding has gone toward advancements in layer-1 and layer-2 scaling solutions, decentralized physical infrastructure networks, and middleware platforms.
The financial services sector also saw renewed interest, with investments in blockchain-based finance climbing to $86 million, up from $55 million in 2023.
DeFi-related funding has rebounded, particularly in areas like staking, liquid staking, tokenized real-world assets, and multi-chain financial products.
However, not all sectors have benefited from this momentum. Entertainment-related blockchain projects, including web3 gaming and digital collectibles, saw funding decline from $60 million in 2023 to $41 million in 2024, reflecting a pullback in investor appetite for this segment.
Despite the overall recovery, securing large-scale capital remains a hurdle, especially for later-stage startups.
The absence of mega investment rounds ($100M+) since 2022 signals lingering caution among domestic investors, many of whom remain hesitant due to India’s steep taxation on virtual digital assets and ongoing regulatory ambiguity.
To bridge this gap, many startups have turned to global web3 funds and ecosystem grants from blockchain foundations.
Crowd sales and token-based fundraising have also emerged as key alternatives, offering early-stage projects a path to growth without relying solely on traditional venture capital.
Gen Z leads the charge
A major trend in 2024 has been the return of retail investors to centralized exchanges.
Rising asset prices have drawn new participants into the market, with portfolio allocations heavily favoring blue-chip cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), which account for 45% of retail holdings.
At the same time, memecoin trading volumes surged fivefold in 2024 compared to other asset categories, reflecting a shift toward high-risk, short-term speculation.
Gen Z, which now makes up 35% of India’s crypto investor base, has played a key role in driving the memecoin trend, prioritizing quick gains through exposure to volatile assets.
In contrast, investors aged 40–45 exhibit higher risk tolerance through large trades, and those in their 40s, on average, invest three times more per person than younger age groups.
Futures and options trading has also gained traction, with 66% of crypto derivatives traders under the age of 35 — an indication that younger investors are increasingly comfortable with leveraged products.
Meanwhile, women remain underrepresented in derivatives trading, with only one in ten futures traders being female, signaling room for greater participation.
The market remains largely retail-driven, with 96% of trades below $12 per position. However, 45% of traders are active daily, highlighting strong engagement.
A key shift in trading behavior has been the growing use of risk management tools — 59% of futures traders now employ stop-loss mechanisms, a sign of maturing strategies as retail participants refine their approach.
Meanwhile, enterprise adoption continues to expand, with both government and private sector players integrating blockchain solutions into their operations.
Several Indian states have deployed blockchain for land registry digitization, digital certifications, and supply chain transparency.
Private enterprises are equally committed to leveraging blockchain’s potential. Conglomerates like Reliance, Bajaj, and Tata have partnered with web3 startups and global blockchain networks to enhance operational efficiency and security.
For instance, Reliance Jio, in collaboration with Polygon (POL), is working on web3 integrations across its 450-million-user ecosystem, focusing on digital transactions and loyalty programs.
In the food sector, Mother Dairy has implemented blockchain for real-time supply chain tracking, boosting transparency and consumer trust.
Flipkart has also embraced blockchain technology, onboarding over 3.6 million wallets through its FireDrops rewards initiative.
India’s dev army grows
According to the report, India now accounts for 8% of the world’s full-time web3 developers and 12% of the total web3 developer base — up from just 5% a decade ago. In 2024 alone, India contributed 17% of all new web3 developers worldwide, more than any other nation.
With a 28% year-over-year growth, India added over 4.5 million developers to GitHub in 2024, making it the fastest-growing developer community globally. At this pace, India is projected to surpass the U.S. and become the world’s largest developer base by 2028.
The expansion of web3 talent is largely driven by India’s young, tech-savvy workforce. Over 50% of Indian web3 developers have entered the field within the past two years, but attracting senior talent remains a challenge.
Many experienced engineers are being drawn to higher-paying roles in artificial intelligence and big tech, creating a gap in seasoned blockchain professionals.
Ethereum remains the most widely used blockchain among Indian developers, particularly in DeFi and infrastructure projects. However, Solana (SOL) and Polygon have gained ground due to their lower transaction costs and improved developer experience.
Other ecosystems like Aptos (APT) and Base are also making inroads, particularly in gaming and tokenized real-world assets.
Hackathons have played a critical role in onboarding developers into web3. These events provide not just funding but also networking opportunities with global teams and blockchain foundations.
According to the report, 87% of Indian web3 developers have participated in at least one hackathon, while 48% have attended three to five.
Recognizing this momentum, blockchains like Polygon, Solana, and Avalanche (AVAX) have launched India-focused grants and bootcamps to further accelerate talent growth.
In terms of contributions, Indian developers are deeply engaged in core blockchain development. The report notes that 45% contribute directly to core codebases, 30% focus on bug fixes, and 22% work on improving documentation.
Despite their large-scale contribution, financial incentives remain a weak point. More than half (51%) of Indian web3 developers believe their salaries lag behind those of their counterparts in North America and Europe.
This disparity could hinder long-term growth, as experienced developers may move to higher-paying industries. To maintain momentum, addressing the pay gap and establishing clearer career paths will be crucial.
The missing piece in India’s web3 growth
While India’s web3 ecosystem is expanding rapidly across startups, enterprises, and developers, regulatory uncertainty remains a major hurdle.
Over the past few years, the government has shifted from an outright ban on crypto to a more measured stance. However, unclear taxation policies, heavy compliance burdens, and sporadic enforcement actions continue to create obstacles for businesses and investors.
One of the biggest challenges is India’s steep tax regime on virtual digital assets. The 30% flat tax on crypto income, coupled with a 1% Tax Deducted at Source on every transaction, has driven many traders and investors to offshore platforms.
Reports suggest this migration of trading volume from Indian exchanges to foreign platforms has cost the government billions in potential tax revenue. Despite persistent calls for reform, there is no official indication that these tax policies will be eased anytime soon.
On the compliance front, India’s anti-money laundering regulations for virtual asset service providers have added another layer of complexity.
In December 2024, the government blocked access to several foreign crypto exchanges operating without AML registration, reinforcing concerns that regulation is being enforced through punitive actions rather than clear legal frameworks.
Meanwhile, the Reserve Bank of India remains wary of digital assets. The central bank has consistently opposed private cryptocurrencies, citing risks to financial stability, currency sovereignty, and illicit activity.
Instead, the RBI has pushed forward with its Central Bank Digital Currency pilot, which now has over 5 million users and participation from 16 major banks.
While this signals some degree of blockchain adoption, the RBI’s reluctance to fully embrace decentralized assets continues to create friction within the industry.
Despite these challenges, there are signs that India may move toward regulatory alignment with global standards.
The G20 Leader’s New Delhi Declaration in 2023 clarified the need for international coordination on crypto regulation, and India has actively engaged with the Financial Action Task Force and the Financial Stability Board.
The International Financial Services Centres Authority has also positioned itself as a more progressive regulator, offering sandbox approvals for tokenized real-world assets — a step that could lay the foundation for clearer frameworks in the future.
Still, uncertainty dominates India’s web3 market. Many Indian-founded web3 projects have opted to incorporate offshore jurisdictions with clearer policies, sidestepping the complexities of India’s taxation and compliance regime.
The road ahead
India’s web3 ecosystem is at a crossroads, with two possible paths.
If regulatory clarity improves, investment and enterprise adoption could accelerate, positioning India as a global blockchain leader.
Conversely, if regulatory hurdles persist, more projects and talent may shift offshore, stalling domestic innovation.
For now, India remains one of the world’s most dynamic web3 markets, fueled by a deep pool of skilled developers, growing enterprise adoption, and increasing institutional involvement.
Whether the country cements itself as a web3 powerhouse or struggles under regulatory pressure will depend on the policy and investment decisions made in the years ahead.
This article first appeared at crypto.news
