Crypto License in India

A Virtual Asset Service Provider (VASP) license in India would govern businesses dealing with the issuance, trading, and custody of cryptocurrencies and other Virtual Digital Assets (VDAs). Although specific license guidelines are still pending, the intention is to bring crypto exchanges, wallet providers, and token issuers under a regulated umbrella. This ensures transparency, investor protection, and AML/CFT compliance.

While there is no official date, industry experts anticipate that formal legislation—possibly under the Cryptocurrency and Regulation of Official Digital Currency Bill—could be enacted around 2025 onwards. In the meantime, the Indian government recognizes crypto assets as Virtual Digital Assets (VDAs) for taxation and financial reporting. It is wise to stay prepared by registering your company and complying with existing rules enforced by FIU-IND (Financial Intelligence Unit-India).

Not necessarily. You may use a virtual office in India to satisfy the requirement for a local address. However, having a physical presence can enhance credibility and can be beneficial if additional crypto license in India requirements demand in-person verification or ongoing compliance checks. Always consult local experts to ensure you meet all Companies Act 2013 provisions.

At present, crypto exchanges in India must comply with KYC/AML norms and register with FIU-IND for AML/CFT compliance. They are also subject to the 30% tax on crypto profits and the 1% TDS for certain transactions. Future legislation may introduce a dedicated crypto exchange license or require VASPs to obtain specific approvals from the Reserve Bank of India (RBI) or the Securities and Exchange Board of India (SEBI).

Foreign entrepreneurs and investors can register a company in India (e.g., a Private Limited Company under the Companies Act 2013) and follow the same taxation and compliance rules as domestic businesses. As India’s regulatory landscape evolves, foreign-owned entities will likely need to obtain a crypto license in India just like local companies.

Yes. Non-compliance with AML/CFT laws or failing to pay the applicable crypto taxes can lead to heavy fines, legal actions, or even the shutdown of your business. Regular audits, transparent record-keeping, and adherence to new guidelines are essential for anyone aiming to operate a legitimate cryptocurrency company in India.

The exact timeline will depend on the finalized regulations. Generally, obtaining any new license involves multiple steps—such as company registration, KYC/AML policy approval, and FIU-IND registration—each of which can take weeks to months. Keeping thorough documentation and seeking professional advisory services can help expedite the process.

India imposes a flat 30% tax on profits earned from selling or trading cryptocurrencies. Beyond the acquisition cost, no other expenses or deductions are permitted. Additionally, certain transactions may attract a 1% TDS if they exceed INR 50,000 (approximately USD 600). Maintaining accurate records of all trades and holdings is crucial for compliance.

Stablecoins and fiat-pegged tokens typically fall under the broader umbrella of virtual digital assets. Once a Crypto License in India framework is established, stablecoin issuers and traders may be required to register as VASPs. Until then, these activities are governed by existing AML/CFT and tax regulations, and any new guidelines introduced by the RBI or the Ministry of Finance.

DeFi platforms often operate on decentralized networks, making regulatory oversight more complex. While India has not released specific rules for DeFi yet, new laws on crypto licenses could extend to DeFi operators, particularly if they involve token issuance, lending, or trading. Ongoing AML/CFT compliance will be crucial, and it’s advisable to monitor regulatory developments closely.

Currently, there are no official capital requirements strictly tied to a “crypto license,” since it does not formally exist in India. However, if the government introduces a capital reserve rule akin to traditional financial institutions, crypto businesses might be required to maintain a certain minimum capital threshold. Until formal guidelines are published, ensure you maintain a sound financial structure to meet potential requirements.

Virtual Asset Service Providers need to register with the Financial Intelligence Unit-India to comply with Prevention of Money Laundering Act (PMLA) and other AML/CFT rules. Depending on your business structure (e.g., individual proprietor, partnership, or corporate entity), you will submit different documents, including identification proofs, certificate of incorporation, and board resolutions authorizing representative individuals. Failure to register or submit transaction reports can result in penalties.

While cybersecurity insurance is not yet a legal requirement, it is strongly recommended given the high risk of cyberattacks and data breaches. Having insurance can demonstrate a proactive approach to consumer protection, which may be viewed favorably by regulators once a Crypto License in India is formalized.

Cross-border transactions are generally subject to foreign exchange laws overseen by the RBI. Upcoming crypto regulations may further clarify if additional permissions or disclosures are required for transferring digital assets internationally. Businesses should consult legal experts to ensure FEMA (Foreign Exchange Management Act) compliance and stay updated on any new regulatory guidelines.