India’s crypto industry calls for regulatory sandboxes and AI tools at TechSparks 2026

Tax disparities and regulatory challenges

India’s crypto exchanges face a 30% tax framework and tax deducted at source (TDS) requirements, putting them at a disadvantage compared to foreign platforms. WazirX Vice President Rajagopal Menon highlighted that this has contributed to a decline in spot trading volumes, which peaked at $48 billion during the 2021-22 bull run.

Menon and other panelists at TechSparks 2026 argued that regulatory sandboxes—like those operated by SEBI and IFSCA—could help address gaps in identity verification for on-chain assets. However, digital asset-native fintech companies have not been permitted to participate in these initiatives.

Derivatives and AI reshape trading

As spot trading volumes shrink, futures and derivatives trading is gaining momentum. Satish Mishra, CTO of Pi42 and SharkExchange, noted that his team built a platform specifically for derivatives rather than adapting a spot-trading system.

WazirX has introduced India’s first AI-powered crypto agent to assist traders with market analysis. Menon emphasized that AI tools should support decision-making rather than replace human judgment. EmpowerEdge Ventures founder Sharat Chandra added that AI systems in trading must be trustworthy, explainable, auditable, and fair.

The panel also discussed the emergence of compute futures—such as those launched by CME in the US—as a potential new asset class. This development could bridge AI and digital assets, but India’s regulatory framework has not yet addressed it.

Operational and compliance demands

Crypto markets operate 24/7, creating unique challenges for risk management and incident response. Trading activity often spikes during evenings and weekends, particularly in response to movements in US markets. Mishra emphasized the need for scalable infrastructure to handle these fluctuations.

Tokenisation of corporate bonds in India remains limited to institutional players, despite growing interest in digital asset innovation. The panelists called for clearer guidelines to expand access while ensuring compliance with existing financial regulations.

What this means

Lazyfounder analysis — our interpretation, not reported fact.

For crypto founders and operators, the discussion at TechSparks 2026 signals a critical juncture. The push for regulatory sandboxes reflects frustration with India’s current tax and compliance framework, which has forced users toward foreign exchanges. The rise of derivatives and AI tools also suggests that startups focusing solely on spot trading may struggle to compete unless they diversify their offerings. Meanwhile, the exclusion of crypto-native players from regulatory sandboxes underscores the need for advocacy to shape policies that support innovation rather than stifle it. The emergence of compute futures could open new opportunities, but only if regulators provide clarity.

Key takeaways

• Founders in crypto must navigate a tax and regulatory environment that favors foreign exchanges, making compliance a key competitive factor.
• The shift toward derivatives and AI tools means startups relying on spot trading alone may need to expand their product offerings to stay relevant.
• Regulatory sandboxes could help close compliance gaps, but crypto-native players currently lack access, limiting innovation.
• The 24/7 nature of crypto markets demands robust infrastructure and risk management, particularly for platforms serving Indian traders.

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