Nithin Kamath, co-founder and CEO of stock broking platform Zerodha , has raised serious concerns about the regulatory ambiguity surrounding crypto futures and options (F&O) platforms. Speaking publicly, Kamath described these platforms as existing in a regulatory limbo—neither fully regulated nor completely unregulated—which creates dangerous opportunities for exploitation and investor loss.
Platforms as Counterparties and Leverage Risks
Kamath highlighted a key risk: that many crypto F&O platforms act as the counterparty to all trades, functioning much like traditional dabba trading or CFDs (Contracts For Difference). This conflict of interest means platforms benefit when users lose money, distorting incentives and potentially incentivizing unfair practices. Furthermore, he warned about the extreme leverage offered by some platforms—often 100 to 200 times—making even small price moves catastrophic for traders due to the volatility of cryptocurrencies.
Lack of Investor Protection Compared to Stock Markets
Unlike traditional stock markets regulated by SEBI, where investors enjoy a safety net and formal recourse against fraudsters or mismanagement, the crypto derivative universe offers no comparable protections. Investors who suffer losses on these platforms face limited or no avenues for complaint or recovery. Kamath urged greater regulatory clarity and oversight to mitigate risks and protect investor interests before more significant damage occurs.
Regulatory and Market Landscape
While global regulators are increasingly warning about crypto’s risks to financial stability and integrating digital assets into mainstream finance, crypto prices surged to record highs in 2025 before recent corrections. Kamath’s warnings underscore the urgent need for clear rules as crypto derivatives become ever more popular and interconnected with traditional financial systems.
