NEW DELHI, Aug. 31 -- When India imposed a flat 30% tax on cryptocurrency profits in 2022, along with a 1% tax deducted at source (TDS) on the full sale value of trades, it pushed many retail investors out of the market. The levy, coupled with rules that prevented losses from being offset against gains, left traders facing steep bills even when their portfolios were in the red.

But a workaround has emerged. A growing number of traders are turning to cryptocurrency futures, which aren't taxed like spot trades, allow losses to be offset, and avoid the 1% TDS-making them an attractive, if risky, alternative.

Crypto futures function like standard futures contracts: derivative bets on the price of tokens such as Bitcoin or Ether. Most major ...