India has one of the biggest crypto markets in the world, and still no dedicated crypto law. You can legally trade it, it isn’t legal tender, and instead of one regulator calling the shots, there are several government bodies pulling in different directions.
That tension came to a head this year. January brought a big AML/KYC overhaul. April brought much tighter tax reporting. May saw exchanges hauled in front of a Parliamentary committee. And by July, the RBI was telling Parliament flatly that crypto “should not be legalised.”
Multiple Regulators, One Market
- Ministry of Finance / CBDT sets the tax rules and answers for crypto policy in Parliament.
- FIU-IND treats exchanges as PMLA “Reporting Entities,” writes the AML/CFT guidelines, and can get offshore sites blocked.
- RBI won’t call crypto legal tender, keeps banks away from it, and clearly wants it contained if not banned outright — while it builds out the Digital Rupee (e₹).
- SEBI isn’t a crypto regulator yet, but has hinted it might treat VDAs as securities, which would put it at odds with the RBI’s line.
- Enforcement Directorate (ED) goes after money laundering under PMLA and unauthorised cross-border transfers under FEMA.
Crypto Background Before 2026
The RBI has been wary of crypto since 2013, warned again in 2017, then cut banks off from crypto businesses altogether in 2018, a move the Supreme Court struck down in 2020. Budget 2022 is really where things changed: a flat 30% tax plus 1% TDS from July that year, with no way to offset losses. Then in 2023, exchanges got reclassified as PMLA reporting entities, which meant registering with FIU-IND.
After that, enforcement mostly moved offshore. Show-cause notices went out to Binance, KuCoin, Kraken and others in December 2023. Binance got hit with a penalty in mid-2024. Bybit was fined ₹9.27 crore in January 2025. By late 2025, another 25 offshore platforms had received takedown notices.
Also Read : Crypto India : ED Raids Bengaluru Crypto Firms in ₹2,500 Crore FEMA Probe
Crypto Regulations in 2026
January
FIU-IND issued updated AML/CFT guidelines (Jan 8–11): live-selfie liveness checks, geo-tagged onboarding, penny-drop bank verification, mandatory Designated Director/Principal Officer, and a ban on mixers and anonymous tokens.
February
Budget 2026 kept tax rates unchanged but added penalties for reporting entities that misreport. In Lok Sabha replies (Unstarred Q309, Q263), Minister of State Pankaj Chaudhary confirmed VDAs remain unregulated, the government holds no data on individual holdings, and no ban proposal was under consideration.
March
FIU-IND issued fresh PMLA blocking orders (~March 10) against unregistered offshore platforms.
April
The year’s biggest shift: from April 1, exchanges must share transaction data directly with the Income Tax Department. Schedule VDA reporting became mandatory from FY2025-26, app logs became usable in investigations, and officers could inspect crypto wallets during raids. Penalties: ₹200/day for non-reporting, up to ₹50,000 for incorrect disclosure.
Also Read : India Crypto Tax Notices
May
The Parliamentary Standing Committee on Finance (chaired by Bhartruhari Mahtab) took formal evidence on “A Study on Virtual Digital Assets and Way Forward.” On May 20, it heard from ZebPay, Binance and WazirX, then IFSCA, then the Ministry of Finance and Ministry of Corporate Affairs, the first time international exchanges were consulted directly.
June
ED action intensified: a June 15 search and arrest tied to a ₹500 crore Korvio Coin Ponzi scheme (~248,000 investors affected), plus a prosecution complaint in a Coinbase-phishing case (₹64.55 crore). On June 17, ED raided five Bengaluru crypto-payment firms under FEMA over an alleged ₹2,500 crore in unauthorised cross-border stablecoin transfers, freezing ~₹6 crore.
Also Read : Binance India Users Face New Crypto Transfer Rules From June 22
July
On July 2, the RBI told the Parliamentary Standing Committee that VDAs “should not be legalised,” pushing containment and the Digital Rupee as its preferred alternative; ICAI, appearing the same day, argued for a clear legal framework instead.
Reuters reported (July 8–9) that internal government documents confirm the RBI’s stance has hardened to “leaning toward prohibition,” while tax authorities estimated ~39 million Indian investors held ~$2.1 billion in crypto as of end-May 2026, with 54 VDASPs registered with FIU-IND. A committee report is expected this monsoon session.
Also Read : Crypto India: Nischal Shetty Says India’s 1% Crypto TDS Has Hurt Market Liquidity
Registration & Licencing Policy
- India has no dedicated crypto licensing law. Instead, every VDA service provider, exchange, custodian, wallet, broker, NFT platform, or token issuer, must register on FIU-IND’s FINgate portal.
- The rule is activity-based, not location-based: offshore platforms serving Indian users are covered regardless of where they’re based.
- Registration requires a Designated Director and Principal Officer, a written AML/CFT policy, and a public compliance summary. As of July 2026, 54 VDASPs are registered. Operating unregistered is a PMLA Section 13 violation, risking blocking orders or fines.
Latest Crackdowns
- March 2026 — FIU-IND blocking orders on unregistered offshore exchanges.
- June 15 — ED search/arrest in the ₹500 crore Korvio Coin case; Coinbase-phishing prosecution complaint.
- June 17 — ED raids on five Bengaluru crypto-payment firms over ₹2,500 crore in unauthorised FEMA transfers.
- Earlier precedent still shaping enforcement: Binance’s 2024 FIU-IND penalty, Bybit’s ₹9.27 crore fine, and an August 2024 GST notice to Binance for ₹722.43 crore in unpaid tax.
Adoption, Institutions, and Investors
Tax department estimates cited in government-reviewed documents put India at roughly 39 million crypto investors holding ~$2.1 billion as of end-May 2026, the clearest government-linked figure available, though likely an undercount given known gaps in tracking offshore and P2P activity. FIU-IND separately confirms 54 registered VDASPs.
The compliance gap remains large and Parliament-acknowledged: fewer than 25% of the roughly 645,000 people who traded crypto in FY2023 reported it on their returns. The Ministry has confirmed it has no real-time ITR-to-TDS matching system, relying instead on AI tools (Project Insight, NMS) to flag mismatches after the fact.
MP Raghav Chadha told Parliament during the FY2026-27 Budget debates that an estimated 72.7% of India’s crypto trading volume now happens offshore.
Tax Treatment
30% flat tax on VDA gains plus surcharge and 4% cess; 1% TDS under Section 194S; no loss offset and no deductions beyond acquisition cost; GST (from July 2025) on platform fees, shown separately; mandatory Schedule VDA in ITR-2/ITR-3 from FY2025-26; direct exchange-to-IT-Department data sharing from April 1, 2026, with ₹200/day and ₹50,000 penalties for non-compliance. The Finance Ministry has said no changes to this structure, and no Bitcoin/crypto ETF, are currently planned.
Key Regulatory Bodies
- RBI (currency policy, containment stance, CBDC)
- SEBI (potential future VDA-as-securities regulator)
- Ministry of Finance/CBDT (tax policy)
- FIU-IND (PMLA registration, AML/CFT)
- Enforcement Directorate (money laundering, FEMA), and the Parliamentary Standing Committee on Finance (ongoing VDA study, report due this monsoon session).
Conclusion
In 2026, India’s crypto policy moved from uncertainty toward stricter control, but without a full ban. Taxes stayed the same, while compliance tightened through more reporting, stronger KYC rules, and increased enforcement actions. The RBI remains against legalising crypto, while SEBI, ICAI, and industry players are pushing for clearer regulations.
With new policy discussions ahead, India’s direction looks like more regulation and monitoring, not a crypto shutdown.
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