Cryptocurrency in India

Law

Regulation history

2018 April 6: RBI notification titled “Prohibition on dealing in Virtual Currencies (VCs)” which says “entities regulated by the Reserve Bank shall not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs. Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs.”
2019 July 22: “The Draft Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019” was presented to the Ministry of Finance. (according to PRS India)
2020 March 4: Supreme court judgement link 1 link 2 says “Therefore, in the light of the above discussion, the petitioners are entitled to succeed and the impugned Circular dated 06-04-2018 is liable to be set aside on the ground of proportionality”
2021 January 29: “The Cryptocurrency and Regulation of Official Digital Currency Bill” was added in “Government business expected to be taken up during the Fifth session of Seventeenth Lok Sabha, 2021”. It was supposed to be similar to the 2019 bill as per PRS India “to prohibit all private cryptocurrencies in India while allowing for certain exceptions that promote the technology of cryptocurrency. Also, creates a framework for digital currency that will be issued by the Reserve Bank of India”
2021 December 20: ToI reports that “Govt set to defer introduction of crypto bill in Parliament”.
2023 March 28: Parliament answer to unstarred question 3104 says “Currently, Crypto Assets are unregulated in India. However, Government vide Finance Act, 2022, brought a comprehensive taxation regime for transfer of virtual digital assets (VDAs) and vide notification dated 7th March, 2023 also brought VDAs under the preview of the Prevention and Money-laundering Act, 2002.”, “RBI has recommended that crypto assets should be prohibited. Crypto assets are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any legislation for regulation or for banning can be effective only with significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards”, “For examining the issues of Virtual Currencies, the Government had constituted an Inter-Ministerial Committee (IMC) which submitted its report in 2019. The IMC, inter-alia, recommended that all private cryptocurrencies be prohibited in India. A copy of the report is available at https://dea.gov.in”

Tax law

Section 115BBH inserted by the Finance Act, 2022, w.e.f. 1-4-2023:

Basically, “at the rate of thirty per cent”

Some more links:

PMLA

Notification dated 2023 March 7 - brings it under PMLA.

Financial Intelligence Unit India

Based on the PMLA inclusion, it became necessary for Virtual Digital Asset service providers to register in FIU-India. Guideline

2023-10-17: Revised notification

More circulars on FIU website

Foreign Exchange Management Act

Indian government has selectively used FEMA to target firms bringing in money via crypto .

List of VDA service providers registered under FIU

This list should not be considered as “permit”/“license”. In unstarred question 5805, 2026 March 30, the answer had 54. There’s a similar question from 2024, which had 47

They get notices on non-compliance, etc. For example: 2026 September 9: Financial Intelligence Unit- India (FIU-IND) issues notices for non-compliance to 15 Virtual Digital Assets Service providers (VDA SPs) under Section 13 of the Prevention of Money Laundering Act (PML) Act, 2002

Technical issues

Crypto wallets are frequently hacked and crypto stolen from users.
Crypto exchanges themself can be hacked. Eg: WazirX hack