Is Crypto F&O Safe in India? Zerodha CEO Nithin Kamath Warns

Is Crypto F&O Safe in India? Zerodha CEO Nithin Kamath Warns of “Regulatory Trap”

The “Schrödinger’s Cat” Warning

“Nithin Kamath, the CEO of Zerodha, dropped a bombshell warning on Twitter/X today (Nov 26) regarding the state of Crypto Futures & Options (F&O) platforms in India.

He described the current ecosystem as ‘Schrödinger’s cat’—meaning these platforms exist in a state that is neither fully regulated nor fully unregulated.

His Warning: ‘This ambiguity is being exploited in dangerous ways.’ He specifically pointed out that unlike the Stock Market (SEBI regulated), Crypto F&O has no safety net.”

The 3 Biggest Risks He Highlighted

Why is Kamath worried? He listed three critical risks that every trader must know:

Insane Leverage: Platforms offering 100x Leverage are setting traders up for guaranteed bankruptcy. A 1% move can wipe your entire capital.”

Counterparty Risk: In many cases, the platform itself is trading against you. If you win, the platform loses money. This creates a conflict of interest (like a Casino).

No Recourse: If a platform freezes your funds or manipulates prices (scam wicks), you cannot complain to SEBI or RBI. You are on your own.

Insane Leverage: Platforms offering 100x Leverage are setting traders up for guaranteed bankruptcy. A 1% move can wipe your entire capital.

Is Crypto F&O Legal in India? (The Grey Area)

“Technically, trading Crypto Derivatives is not illegal, but it is unregulated.

• The Problem: Most F&O platforms operate offshore (outside India). If they shut down tomorrow (like FTX), your money is gone forever.

The Solution: Stick to Spot Trading (Buying and Holding) on FIU-Registered Indian exchanges where at least some compliance exists.

What Should You Trade Instead? (Monetization)

“If you want to trade F&O, do it where it is safe: the Indian Stock Market (NSE/BSE).

• Safety: Regulated by SEBI. Your funds are safe.
• Transparency: You trade against other people, not the house.

Best Apps for Safe Trading:

1. Zerodha / Angel One: Best for F&O with low brokerage.
2. CoinDCX: If you must buy crypto, stick to Spot trading here.

Nithin Kamath’s warning is a wake-up call. The promise of ‘quick millions’ in Crypto F&O often leads to zero balance. Smart money is moving back to regulated markets.