Indian Crypto Startups Raise $890M in 2025: Why VCs Are Betting Big Despite Regulations

• Indian crypto startups raised $890M in 2025 with growing VC bets
• Clarity on tax/AML compliance boosts institutional and startup confidence
• Top funding targets: compliance, blockchain infra, DeFi, and fund management

Indian crypto startups have stormed back into the spotlight, raising a staggering $890 million in 2025 amid a regulatory landscape that’s both restrictive and promising. As government scrutiny and tax rules remain strict, why are global and Indian VCs doubling down on this sector? Is India on track to become the world’s next major Web3 and blockchain hub—or is volatility lurking beneath the surface?

Why Are Indian Crypto Startups So Hot in 2025?

How did Indian crypto funding rocket to $890M this year?

In the face of a 30% tax on gains and a 1% TDS on all transactions, Indian crypto startups just raised a record $890 million in VC funding. Big names like CoinDCX, Mudrex, BitSave, and Polygon led the surge, with sector-wide growth in blockchain infrastructure, DeFi, and Web3 gaming. As reported by Startup INDIAX, VCs see India’s massive tech talent, huge retail market, and growing regulatory clarity as irresistible, even as tax and compliance codes filter out “speculators” in favor of serious Web3 builders.

Read More: WazirX to Restart Operations: India’s Crypto Giant Returns with Zero Trading Fees

What’s Driving Investor Confidence Despite Regulations?

Why would VCs risk their money in a market filled with legal uncertainty?

The answer: India’s “wait and see” approach means crypto is legal to own, invest, and trade—but not as legal tender. This lets cutting-edge startups launch new digital asset products, while U.S. and Indian VC heavyweights like Sequoia Capital, Blume Ventures, and Matrix Partners fuel the high-risk, high-reward wave. Startups are aligning quickly with FIU-IND registration, anti-money laundering (AML) rules, and robust KYC processes, making compliance a growth lever instead of a roadblock.

Read More: Why Top VCs Are Betting Big on Indian Deeptech Startups in 2025

What Do the New Crypto Regulations Actually Mean?

How harsh are India’s crypto laws in 2025?

While the government never greenlit a full “Crypto Bill,” existing rules are clear: All crypto profits are taxed at a flat 30%, and 1% TDS is auto-deducted from every sizable transaction. Trading and investing are 100% legal; only payment use is banned. Top exchanges like CoinDCX, CoinSwitch, and WazirX now operate as fully AML-compliant entities, protecting retail investors while curbing money laundering. India’s Digital Rupee (CBDC) is also gaining ground, but the government resists making crypto “systemic” to avoid risks to the mainstream financial system.

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Who’s Winning Big: Top Startups and Sectors

What sectors and companies are at the center of this gold rush?

Key winners in 2025 VC funding are in blockchain infrastructure (Polygon, KGen), crypto fund management (Quantmatter, Mudrex), and DeFi platforms (BitSave, Antier Solutions). AI-powered compliance, RegTech, and tokenized investment tools are also hot bets. Notably, institutional adoption is rising, with solutions aimed at making crypto safer for Indian wealth managers and retail as the startup ecosystem matures fast.

Read More: Tech Startup Funding: 5 Epic Reasons India’s $4.8B Boom Rules

One user wrote, “Even with all these taxes, India’s crypto scene is much safer and more transparent now.”

Another said, “I wish the government would speed up real regulation. Web3 needs clarity, not just crackdowns.”

A third commented, “VC bets returning means crypto winter is over—this could be India’s turn to lead globally.”

What’s your take on India’s crypto surge? Share your thoughts below, and discover more pioneering startup stories at Startup INDIAX!

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