Is Crypto Legal in India?

FIU-IND registers VDA service providers as reporting entities under the PMLA 2002 (FIU guidelines effective 10 Mar 2023); on 28 Dec 2023 it issued section 13 show-cause notices to nine offshore VDA service providers and asked MeitY to block their URLs.

SEBI does not license crypto exchanges or classify crypto tokens; the Ministry of Finance states that crypto products and NFTs are unregulated in India, and VDA service providers register with FIU-IND under the PMLA.

The RBI runs the e₹ CBDC, which is being piloted in retail and wholesale segments (RBI FAQ, 1 Oct 2026); its 6 Apr 2018 circular barring regulated entities from dealing in virtual currencies was set aside by the Supreme Court on 4 Mar 2020.

PMLA 2002 s 2(1)(sa)(vi): Ministry of Finance notification F.No. P-12011/12/2022-ES Cell-DOR of 7 Mar 2023 brought five VDA activities under the Act, and VDA service providers must register with FIU-IND as reporting entities (FIU guidelines effective 10 Mar 2023).

Finance Act 2022 inserted s 115BBH (30% tax on income from transferring a virtual digital asset, from AY 2023-24) and s 194S (1% TDS from 1 Jul 2022; none where a specified person pays up to ₹50,000 a year or another payer up to ₹10,000). Section numbers are those of the Income-tax Act 1961; the Income-tax Act 2025 replaced that Act from 1 Apr 2026 and also defines VDAs.

India has no VASP licence: VDA service providers register with FIU-IND as PMLA reporting entities (guidelines effective 10 Mar 2023). PIB reported 31 registered as of 28 Dec 2023 and 50 as of 1 Oct 2025; FIU-IND publishes no register.

India has no custody-specific crypto framework; safekeeping or administration of VDAs, or of instruments enabling control over VDAs, is one of the five activities notified under PMLA s 2(1)(sa)(vi) on 7 Mar 2023, so custodians register with FIU-IND as reporting entities.

VDA exchanges (VDA–fiat and VDA–VDA) must register with FIU-IND under the PMLA; non-registered offshore exchanges received section 13 notices on 28 Dec 2023 (9), 1 Oct 2025 (25) and 9 Sep 2026 (15), with URL-blocking or IT Act s 79(3)(b) takedown action.

FIU-IND guidelines of 10 Mar 2023 (§6.1.3) require VDA service providers to monitor transactions passing through their systems and to maintain transaction monitoring systems that determine the origin of a VDA and monitor its destination.

FIU-IND guidelines of 10 Mar 2023 (§11.3 "Travel Rule") require VDA service providers, under PMLA Rule 12(1)(a), to include accurate originator and beneficiary information on VDA transfers and to monitor for transfers lacking it; §11.3 states no threshold.

FIU-IND AML & CFT guidelines for VDA service providers (10 Mar 2023) set no minimum capital or net-worth requirement for registration as a reporting entity.

Since 10 Mar 2023 FIU-IND guidelines require registered VDA service providers to apply KYC and client due diligence, monitor transactions, file suspicious transaction reports irrespective of amount, and retain identification records for at least five years under the PMLA.

Local presence is not required: PMLA obligations on VDA service providers serving Indian users are activity-based and not contingent on physical presence in India, and each must register with FIU-IND and appoint a Designated Director and a Principal Officer as separate individuals.

Registered VDA service providers must appoint a Designated Director and a Principal Officer and notify FIU-IND of their contact details within 7 days of appointment or change (FIU-IND guidelines, 10 Mar 2023, §5.4).

Ministry of Finance notification F.No. P-12011/12/2022-ES Cell-DOR of 7 Mar 2023 notified five VDA activities under PMLA s 2(1)(sa)(vi): VDA–fiat exchange, VDA–VDA exchange, VDA transfer, safekeeping or administration of VDAs, and financial services for an issuer's VDA offer or sale.

VDA service providers were brought under the Prevention of Money-laundering Act 2002 by Ministry of Finance notification F.No. P-12011/12/2022-ES Cell-DOR of 7 March 2023, which designated five VDA activities under s 2(1)(sa)(vi); FIU-IND's AML & CFT guidelines for these providers took effect on 10 March 2023.

FIU-IND's 10 March 2023 AML & CFT guidelines require VDA service providers to file a suspicious transaction report with FIU-IND irrespective of the transaction amount where there are reasonable grounds to believe the transaction involves proceeds of crime (§7); the travel-rule section (§11.3) sets no monetary threshold.

Five VDA activities carried on for or on behalf of another person make a provider a PMLA reporting entity: VDA-fiat exchange, VDA-VDA exchange, VDA transfer, safekeeping or administration of VDAs, and financial services for an issuer's VDA offer; all must register with FIU-IND, which counted 31 registered providers on 28 December 2023 and 50 on 1 October 2025.

FIU-IND's 10 March 2023 AML & CFT guidelines require VDA service providers to run transaction-monitoring systems that trace the origin and destination of VDAs (§6.1.3), expect blockchain-analytics and sanctions-screening tools in client due diligence (§5.8.5), and apply the travel rule to VDA transfers (§11.3).

The Prevention of Money-laundering Act 2002 was not amended to cover VDAs: the 7 March 2023 notification added VDA activities under s 2(1)(sa)(vi), so VDA service providers are reporting entities under s 2(1)(wa), bound by s 12 record-keeping and reporting duties and subject to FIU-IND penalties under s 13.

FIU-IND issued AML & CFT Guidelines for Reporting Entities Providing Services Related to Virtual Digital Assets on 10 March 2023, effective immediately; FIU-IND lists an updated version dated 8 January 2026 and registration circulars of 4 July 2023, 17 October 2023, 20 January 2025 and 15 September 2025.