Remote VASP serving residents in India

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.

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.

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.

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.

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 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.

Blockchain Analytics Tools: Supported indirectly. Sources highlight blockchain monitoring (e.g., SaaS models analyzing wallets, histories, and typologies like chain-hopping or mixers) as essential for VASP compliance, often integrated with transaction monitoring.

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.

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).

Screening obligations: Continuous screening of wallets, addresses, and counterparties against the Specially Designated Nationals (SDN) List (https://sanctionssearch.ofac.treas.gov), plus the 50% Rule (block entities owned ≥50% by SDN-listed persons) (https://ofac.treasury.gov/faqs/topic/1626). No crypto exceptions; includes sanctioned jurisdictions like Iran, North Korea, Syria, Cuba, Crimea/Donbas (https://ofac.treasury.gov/sanctions-programs-and-country-information).

Blocking: Immediately freeze sanctioned cryptoassets (e.g., from designated wallets/exchanges like Blender.io or SUEX) and report to OFAC; no trading/transfer allowed without license (https://www.elliptic.co/blockchain-basics/what-are-ofac-crypto-sanctions).

Penalties: PMLA fines (up to 3x contravention value) + 3-7 years imprisonment; FEMA violations up to 3x amount.

India applies the travel rule to VDA service providers through §11.3 of FIU-IND's AML & CFT guidelines effective 10 March 2023, which cites PMLA Rule 12(1)(a) and sets no monetary threshold; INR 50,000 is the s 194S TDS limit for specified persons, not a travel-rule threshold.

FIU-IND's travel rule binds both originating and beneficiary VDA service providers, whether or not registered, and for transfers involving an unhosted wallet the compliance duty falls on the provider hosting the other wallet (guidelines of 10 March 2023, §11).

FIU-IND's travel rule for VDA transfers (§11.3 of the 10 March 2023 guidelines) sets no de minimis threshold and applies whether the transfer value is denominated in fiat currency or another VDA; India has not adopted the FATF USD/EUR 1,000 figure.

Under FIU-IND's 10 March 2023 guidelines, VDA service providers must monitor transactions for the origin and destination of VDAs, screen counterparties with blockchain-analytics and sanctions tools, and transmit originator and beneficiary data with each VDA transfer, flagging transfers that lack it.