# India crypto regulation

From the Four Pillars Asia Digital Asset Policy Center. Cite as: Four Pillars Asia Digital Asset Policy Center, "India crypto regulation", reviewed 2026-10-05, https://policy.4pillars.io/india. Free to reuse with attribution: cite "Four Pillars Asia Digital Asset Policy Center" and link to the page the fact comes from (each market has its own URL), and to the primary source where one is given. Terms: https://policy.4pillars.io/developers#attribution


Page: https://policy.4pillars.io/india
Region: South Asia. Last reviewed: 2026-10-05.

> Regulation by tax and AML: crypto is legal, heavily taxed and FIU-registered, but India still has no licensing law.

India's relationship with crypto began with hostility. After years of warnings, the Reserve Bank of India (RBI) barred banks from serving crypto businesses in April 2018. Indian exchanges lost their fiat rails overnight. In March 2020 the Supreme Court struck the circular down in IAMAI v RBI, and a domestic exchange industry grew quickly on the back of the reopened banking access.

The government then chose to regulate through tax instead of a crypto law. The Finance Act 2022 created the category of virtual digital assets (VDAs) and taxed gains at a flat 30% with no loss offsets. It also imposed a 1% tax deducted at source (TDS) on every transfer, which drove a large share of trading to offshore platforms. In March 2023 the Finance Ministry brought VDA service providers under the Prevention of Money Laundering Act, requiring them to register with the Financial Intelligence Unit (FIU-IND).

FIU-IND has since become the de facto gatekeeper. It sent show-cause notices to nine offshore exchanges, including Binance and KuCoin, in December 2023, notices to 25 more in October 2025 and to another 15 in September 2026, alongside app and URL takedowns. By March 2026, 54 VDA service providers had registered, though FIU-IND does not publish the list. The tax regime has been carried into the new Income-tax Act, 2025, in force from 1 April 2026, with crypto-asset reporting aligned to the OECD's CARF and penalties for non-filing.

For builders, India is a huge retail market with no licensing regime, no investor protection law and a tax design that punishes high-frequency trading. RBI remains skeptical of private crypto and promotes its own e-rupee, piloted since late 2022. A long-promised government discussion paper on crypto has still not been published, and Parliament's Standing Committee on Finance has yet to report on its study of VDAs. Until policy changes, FIU-IND registration and tax compliance are the whole rulebook.

### Snapshot

- Exchange licensing: Partial. VDA platforms must register with FIU-IND for AML, but there is no licensing, capital or custody regime
- Stablecoin regime: Restricted. No issuance framework; stablecoins are taxed as VDAs while RBI promotes the e-rupee instead
- Tokenisation & RWA: Restricted. No onshore framework for tokenized securities; VDAs sit outside securities law
- Retail access: Partial. Legal via FIU-registered exchanges, but no investor protection regime and a punitive tax design
- Tax clarity: Comprehensive. 30% flat tax on VDA gains with no loss set-off, 1% TDS on transfers and crypto reporting duties

### Quick answers

**Is crypto legal in India?**

Yes, with limits. Legal via FIU-registered exchanges, but no investor protection regime and a punitive tax design. Four Pillars rates retail access in India as partial (reviewed 5 Oct 2026).

**Who regulates crypto in India?**

Four authorities shape crypto rules in India. FIU-IND (Financial Intelligence Unit India): registers VDA service providers as PMLA reporting entities and enforces AML/CFT rules. RBI (Reserve Bank of India): central bank; skeptical of private crypto and issuer of the e-rupee CBDC. CBDT (Central Board of Direct Taxes): administers the 30% VDA tax, 1% TDS and crypto-asset reporting. DEA (Department of Economic Affairs, Ministry of Finance): leads crypto policy, including the pending discussion paper.

**Do crypto exchanges need a licence in India?**

Yes, though the regime is narrow or still phasing in. VDA platforms must register with FIU-IND for AML, but there is no licensing, capital or custody regime. The licence is FIU-IND Reporting Entity registration for VDA service providers from FIU-IND, held by 54 as of 9 Mar 2026. Four Pillars rates exchange licensing in India as partial (reviewed 5 Oct 2026).

**Are stablecoins regulated in India?**

Only in narrow cases. No issuance framework; stablecoins are taxed as VDAs while RBI promotes the e-rupee instead. Four Pillars rates its stablecoin regime in India as restricted (reviewed 5 Oct 2026).

**How is crypto taxed in India?**

Flat, no loss set-off, plus 1% TDS on each transfer. Four Pillars rates tax clarity in India as comprehensive (reviewed 5 Oct 2026).

**Can real-world assets be tokenised in India?**

Only in narrow cases. No onshore framework for tokenized securities; VDAs sit outside securities law. Four Pillars rates tokenisation and real-world assets in India as restricted (reviewed 5 Oct 2026).

**What changed most recently in India's crypto rules?**

9 Sep 2026: FIU-IND issues notices and takedown orders to 15 VDA platforms. Platforms including WhiteBIT, Pionex and XT.com were targeted, with app and URL blocking requested. 1 Apr 2026: Income-tax Act, 2025 takes effect. The new Act carried over VDA taxation and added penalties for failing to file crypto-asset transaction statements.

**What should companies watch next in India?**

Publication of the government's long-delayed discussion paper on crypto policy, and the Standing Committee on Finance's report on virtual digital assets. Further FIU-IND action and app takedowns against unregistered offshore VDA service providers. The first Form 167 crypto-asset statements, covering calendar 2026 and due by 31 May 2027, and India's CARF data exchanges.

### Key numbers

- 30% Flat tax on VDA gains, with no loss set-off (as of 2022-04-01)
- 1% Tax deducted at source on each VDA transfer (as of 2022-07-01)
- 54 VDA service providers registered with FIU-IND (as of 2026-03-09)
- 68 VDA platforms FIU-IND has ordered blocked: 53 by March 2026, 15 more in September (as of 2026-09-09)

### What to watch

- Publication of the government's long-delayed discussion paper on crypto policy, and the Standing Committee on Finance's report on virtual digital assets
- Further FIU-IND action and app takedowns against unregistered offshore VDA service providers
- The first Form 167 crypto-asset statements, covering calendar 2026 and due by 31 May 2027, and India's CARF data exchanges
- Expansion of RBI's e-rupee pilots, including programmable and offline use cases

### Regulators

- **FIU-IND**, Financial Intelligence Unit India: Registers VDA service providers as PMLA reporting entities and enforces AML/CFT rules. India's financial intelligence agency under the Ministry of Finance. It receives and analyses suspicious transaction reports under the Prevention of Money-laundering Act, 2002, shares intelligence and enforces reporting duties. Registers VDA service providers as PMLA reporting entities since March 2023 (54 by March 2026) and sets their AML rulebook, updated January 2026. It had ordered app and URL takedowns for 53 non-compliant platforms by March 2026, starting with Binance and KuCoin in 2023, and served 15 more in September 2026. <https://fiuindia.gov.in/>
- **RBI**, Reserve Bank of India: Central bank; skeptical of private crypto and issuer of the e-rupee CBDC. India's central bank under the Reserve Bank of India Act, 1934. It sets monetary policy, issues the rupee, regulates banks and non-bank lenders, and oversees payment systems. Cut crypto off from banks in April 2018, a ban the Supreme Court struck down in March 2020; banks may now serve crypto clients with normal due diligence. It remains sceptical of private crypto and has piloted the e-rupee CBDC since late 2022. <https://www.rbi.org.in/>
- **CBDT**, Central Board of Direct Taxes: Administers the 30% VDA tax, 1% TDS and crypto-asset reporting. The statutory board under the Ministry of Finance that sets policy for and administers India's direct taxes, including income tax, through the Income Tax Department. Administers the 30% flat tax on VDA gains with no loss set-off and the 1% TDS on transfers, both from 2022 and now in the Income-tax Act, 2025. It also runs crypto-asset reporting under section 509 and Form 167, aligned with the OECD's CARF, with penalties of ₹200 a day for unfiled statements from April 2026. <https://www.incometaxindia.gov.in/>
- **DEA**, Department of Economic Affairs, Ministry of Finance: Leads crypto policy, including the pending discussion paper. The Finance Ministry department that leads India's economic and financial sector policy, including the Union budget, capital markets and international financial cooperation. Leads crypto policy for the government but has not proposed a licensing law. The discussion paper on crypto it has long promised has still not been published. <https://dea.gov.in/>

### Licences

#### FIU-IND Reporting Entity registration for VDA service providers

- Regulator: FIU-IND
- Legal basis: Prevention of Money-laundering Act, 2002; Notification S.O. 1072(E) of 7 March 2023
- Covers: Exchange between VDAs and fiat, exchange between VDAs, transfer, safekeeping or administration of VDAs, and financial services for token offerings, whether onshore or offshore.
- Requirements: Registration with FIU-IND before serving Indian users, including offshore platforms; Designated director and principal officer appointed for AML compliance; KYC and customer due diligence, record-keeping and travel rule compliance; Suspicious and cash transaction reporting to FIU-IND; No capital, custody or conduct licensing; tax deduction and crypto-asset reporting under the Income-tax Act apply separately
- Holders: 54 (as of 2026-03-09)
- Notable holders: CoinDCX, CoinSwitch, ZebPay, WazirX, Mudrex, Binance, KuCoin, Bybit
- Page: https://policy.4pillars.io/india/licences#lic-1

### Timeline

- 2018-04-06: RBI cuts crypto off from the banking system. RBI told regulated entities not to deal in or provide services for virtual currencies.
- 2020-03-04: Supreme Court strikes down the RBI ban. In IAMAI v RBI the Court set aside the 2018 circular as disproportionate.
- 2021-05-31: RBI tells banks the ban is dead. RBI told banks to stop citing the 2018 circular but to keep applying customer due diligence.
- 2022-04-01: 30% tax on virtual digital assets takes effect. The Finance Act 2022 taxed VDA gains at a flat 30% with no deductions or loss set-off.
- 2022-07-01: 1% TDS on VDA transfers begins. Section 194S required tax deduction at source on every VDA transfer above small thresholds.
- 2022-12-01: Retail e-rupee pilot launches. RBI began its first retail CBDC pilot in four cities, a month after the wholesale pilot.
- 2023-03-07: VDA service providers brought under the PMLA. Notification S.O. 1072(E) made crypto exchange, transfer and custody businesses AML reporting entities.
- 2023-12-28: FIU-IND targets nine offshore exchanges. Show-cause notices went to Binance, KuCoin, Huobi, Kraken and five others for operating unregistered.
- 2025-10-01: Notices to 25 more offshore platforms. FIU-IND said 50 VDA service providers had registered and pursued 25 that had not.
- 2026-04-01: Income-tax Act, 2025 takes effect. The new Act carried over VDA taxation and added penalties for failing to file crypto-asset transaction statements.
- 2026-09-09: FIU-IND issues notices and takedown orders to 15 VDA platforms. Platforms including WhiteBIT, Pionex and XT.com were targeted, with app and URL blocking requested.

### Primary sources

- [FIU-IND issues notices for non-compliance to 15 VDA Service Providers](https://www.pib.gov.in/PressReleasePage.aspx?PRID=2308131). Financial Intelligence Unit India (FIU-IND), via Press Information Bureau, 2026-09-09, guidance. Section 13 PMLA notices and IT Act takedown notices to 15 platforms including WhiteBIT, Pionex and ChangeNow. Repeats the warning that crypto products are unregulated and risky.
- [Finance Act, 2026 (No. 4 of 2026)](https://egazette.gov.in/WriteReadData/2026/271439.pdf). Parliament of India (Gazette of India, Legislative Department), 2026-03-30, in force. The first budget law under the Income-tax Act, 2025. Its new section 446 sets penalties of ₹200 a day for not filing, and ₹50,000 for inaccurate, crypto-asset transaction statements under section 509, from 1 April 2026.
- [Lok Sabha Unstarred Question No. 5805: Regulation of Virtual Digital Assets in the Country](https://sansad.in/getFile/loksabhaquestions/annex/187/AU5805_lMTYNK.pdf?source=pqals). Ministry of Finance, Department of Economic Affairs (Lok Sabha), 2026-03-30, guidance. Official answer listing the 54 VDA service providers registered with FIU-IND as of 9 March 2026 and the 53 platforms whose apps and URLs it had ordered taken down. It confirms FIU-IND does not publish a register and that registration is not a licence.
- [Income-tax Rules, 2026 (G.S.R. 198(E)): rules 241 to 244 and Form 167 on crypto-asset reporting](https://www.incometaxindia.gov.in/documents/d/guest/en-notified-it-rules-2026-20-03-2026-pdf). Central Board of Direct Taxes (CBDT), 2026-03-20, in force. In force from 1 April 2026, these rules set CARF-style due diligence for reporting crypto-asset service providers and require Form 167 statements for each calendar year from 2026, due by 31 May of the following year.
- [AML and CFT Guidelines for Reporting Entities Providing Services Related to Virtual Digital Assets](https://fiuindia.gov.in/pdfs/downloads/VDA08012026.pdf). Financial Intelligence Unit India (FIU-IND), 2026-01-08, in force. FIU-IND's updated rulebook for VDA service providers, first issued in 2023. Covers registration, KYC, travel rule, record-keeping and suspicious transaction reporting.
- [FIU IND issues notices for non-compliance to 25 offshore VDA Service Providers](https://www.pib.gov.in/PressReleasePage.aspx?PRID=2173758). Financial Intelligence Unit India (FIU-IND), via Press Information Bureau, 2025-10-01, guidance. Second enforcement wave against unregistered offshore platforms. Reports that 50 VDA service providers had registered with FIU-IND.
- [3rd Revision of Circular for Registration of Virtual Digital Asset Service Providers in FIU-IND as Reporting Entity](https://fiuindia.gov.in/pdfs/downloads/VDASP15092025.pdf). Financial Intelligence Unit India (FIU-IND), 2025-09-15, in force. Revised process and documentation for VDA service providers, onshore and offshore, to register as reporting entities before serving Indian users.
- [Income-tax Act, 2025 (No. 30 of 2025)](https://egazette.gov.in/WriteReadData/2025/265620.pdf). Parliament of India (Gazette of India, Legislative Department), 2025-08-21, in force. Replaced the Income-tax Act, 1961 from 1 April 2026. It keeps the VDA definition (section 2(111)), the 30% tax with no loss set-off (section 194), the 1% TDS (section 393(1)) and crypto-asset reporting (section 509).
- [Finance Act, 2025 (No. 7 of 2025)](https://egazette.gov.in/WriteReadData/2025/262125.pdf). Parliament of India (Gazette of India, Legislative Department), 2025-03-29, superseded. Added crypto-asset reporting by prescribed entities (section 285BAA of the 1961 Act) and widened the VDA definition. Also brought VDAs into undisclosed income for search assessments. These rules now sit in the Income-tax Act, 2025.
- [FIU IND issues compliance Show Cause Notices to nine offshore VDA Service Providers](https://www.pib.gov.in/PressReleasePage.aspx?PRID=1991372). Financial Intelligence Unit India (FIU-IND), via Press Information Bureau, 2023-12-28, guidance. Named nine offshore exchanges operating without registration and asked the IT ministry to block their URLs. At the time 31 VDA SPs had registered.
- [Notification S.O. 1072(E): VDA activities notified under the Prevention of Money-laundering Act, 2002](https://egazette.gov.in/WriteReadData/2023/244184.pdf). Ministry of Finance, Department of Revenue (Gazette of India), 2023-03-07, in force. Made businesses that exchange, transfer, safekeep or administer VDAs, or provide financial services for token offerings, reporting entities under the PMLA. This is the legal basis for FIU-IND registration.
- [Operationalisation of Central Bank Digital Currency: Retail (e₹-R) Pilot](https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=54773). Reserve Bank of India (RBI), 2022-11-29, guidance. Announced the retail e-rupee pilot from 1 December 2022 with a closed user group of banks, customers and merchants.
- [Concept Note on Central Bank Digital Currency](https://rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=1218). Reserve Bank of India (RBI), 2022-10-07, guidance. Set out RBI's design for a wholesale and retail e-rupee and its view that CBDC is a safer alternative to private cryptocurrencies.
- [Circular No. 13 of 2022: Guidelines under section 194S of the Income-tax Act, 1961](https://www.incometaxindia.gov.in/w/circular-no.-13/2022-guidelines-for-removal-of-difficulties-under-sub-section-6-of-section-194s-of-the-income-tax-act-1961). Central Board of Direct Taxes (CBDT), 2022-06-22, guidance. Explains how exchanges and counterparties deduct the 1% TDS on VDA transfers, including exchange-to-exchange and in-kind trades. Issued under section 194S of the 1961 Act, whose rule now sits in section 393(1) of the Income-tax Act, 2025.
- [Finance Act, 2022 (No. 6 of 2022)](https://egazette.gov.in/WriteReadData/2022/234693.pdf). Parliament of India (Gazette of India, Legislative Department), 2022-03-30, superseded. Inserted the VDA definition (section 2(47A)), the 30% tax (section 115BBH) and 1% TDS (section 194S) into the Income-tax Act, 1961. Carried into the Income-tax Act, 2025 from 1 April 2026.
- [Budget Speech 2022-23 (Scheme for taxation of virtual digital assets)](https://www.indiabudget.gov.in/budget2022-23/doc/Budget_Speech.pdf). Ministry of Finance, 2022-02-01, guidance. The Finance Minister announced the 30% VDA tax and 1% TDS, the first formal recognition of crypto in Indian law.
- [Customer Due Diligence for transactions in Virtual Currencies (VC), RBI/2021-22/45](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12103). Reserve Bank of India (RBI), 2021-05-31, guidance. Confirmed the 2018 circular is no longer valid after IAMAI v RBI. Banks may serve crypto clients but must apply normal KYC, AML and FEMA due diligence.
- [Prohibition on dealing in Virtual Currencies (VCs), RBI/2017-18/154](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11243). Reserve Bank of India (RBI), 2018-04-06, superseded. Barred RBI-regulated entities from dealing in or servicing virtual currencies. The Supreme Court set it aside on 4 March 2020.