Our team explains the legal status of crypto in India in 2025. Here you will find out about the Reserve Bank of India (RBI), crypto policy in India, blockchain, and tax rules.
Is Cryptocurrency Legal in India in 2025?
Yes, it is legal to buy, sell, and hold cryptocurrency in India. Under the Income Tax Act, the Indian government accepts crypto as a virtual digital asset (VDA).
What is the Current Legal Status for Crypto?
Crypto is allowed as an asset, but it is not used for everyday payments like regular currency. Bitcoin and Ethereum are not classified as legal tender in India, meaning you cannot use them to pay for goods and services in the Indian market.
Trading vs. Payment Usage
- Trading: In India, individuals and companies are allowed to buy, sell, and trade cryptocurrencies through exchanges recognized by the government.
- Payment Usage: It is not allowed to use cryptocurrencies to buy goods and services. Crypto prices change quickly and transactions can be difficult to trace which raises concerns about the safety of payments.
The Reserve Bank of India (RBI) does not allow crypto to be used for payments. Instead, it promotes a safer option which is the Central Bank Digital Currency (CBDC)’s use of the Digital Rupee, India’s official digital currency.
Who Regulates Cryptocurrency in India?
Multiple governmental institutions are working together to regulate cryptocurrencies in India. Each body has a specific role such as preventing money laundering, managing trading rules and taxes.
Key Regulatory Bodies
- The Reserve Bank of India (RBI) manages India’s monetary policy and ensures financial stability. As cryptocurrencies become more popular, the RBI monitors risk factors such as volatility and fraud.
- Securities and Exchange Board of India (SEBI) checks crypto trading platforms to ensure legal crypto-token transactions.
- The Ministry of Finance implements rules for cryptocurrency transactions.
How Is Cryptocurrency Taxed in India?
With the increasing use of digital assets, a comprehensive system for cryptocurrency taxation is being created in India.
Key Tax Provisions
- Capital Gains Tax: Taxing policy can be complicated in India. Here we summarize it for you. How much you earn overall or what your profession is does not change the flat rate of 30%. All salaried employees, business owners, or freelancers must file income tax returns in this specified percentage. The main source of income may not be from crypto, but the taxpayers have to follow the Capital Gains Tax rules.
- 1% TDS Rule: If traders have crypto transactions more than ₹50,000, then they must pay a 1% Tax Deducted at Source (TDS) for each trade.
- No Deduction on Losses: This rule means that even if traders lose money, all their profits must be taxed. Under no circumstances is there tax relief on losses.
Are Crypto Exchanges Regulated in India?
Since March 2023, all crypto-related profits must be registered with the Financial Intelligence Unit India (FIU-IND) under the Prevention of Money Laundering Act (PMLA). The following rules are fundamental:
- Customer Due Diligence (CDD): Know Your Customer (KYC) and Electronic Know Your Customer (eKYC) must be used.
- Suspicious Transaction Reporting (STR): Suspicious transactions are investigated by the Financial Intelligence Unit India (FIU-IND).
- Record Keeping for 5 Years: Customer transactions in crypto must be stored for at least 5 years.
- AML Audits and Inspections: International anti-money laundering rules must be consistently applied.
What Is the Role of FIU-IND in Crypto AML Compliance?
FIU-IND, or the Financial Intelligence Unit India, checks if crypto platforms follow anti-money laundering (AML) rules. The FIU-IND is responsible for:
- Monitoring Transactions for Red Flags is about detecting high-risk crypto transactions.
- Reporting Unusual Activity is the process of registering suspicious transactions to the FIU-IND.
- Identity Verification includes KYC/eKYC processes for all customers.
- Preventing Terror Financing and Fraud is to ensure that crypto platforms are not involved in illegal activities.
Real world example: In 2024 alone, more than 15 Indian crypto exchanges were issued notices stating that they had failed to comply with AML rules.
Most Popular Cryptocurrencies in India in 2025
In 2025, India's crypto investor base exceeded 150 million users, making it one of the largest global crypto markets with a dynamic ecosystem built up by retail traders, institutional investors, and fintech startups.
Top Traded Cryptocurrencies in India
| Rank | Cryptocurrency | Popularity Reason | % of Daily Trade Volume |
| 1 | Bitcoin (BTC) | Long-term store of value, global credibility | ~37% |
| 2 | Ethereum (ETH) | Smart contracts, DeFi support | ~22% |
| 3 | Tether (USDT) | Stablecoin used for arbitrage | ~15% |
| 4 | Polygon (MATIC) | Made-in-India L2 solution, low fees | ~12% |
| 5 | Solana (SOL) | High-speed transactions, growing Indian NFT use | ~7% |
According to a 2025 report by Chainalysis, Polygon (MATIC) saw a 40% increase in Indian wallets after government-supported projects in blockchain environment.
Is India a Crypto-Friendly Country in 2025?
India maintains a cautiously supportive stance toward cryptocurrencies in 2025. While it does not recognize crypto as legal tender, it permits ownership, trading, and innovation under tight compliance frameworks.
Crypto-Friendliness Scorecard (India 2025)
| Factor | Status | Notes |
| Ownership | Allowed | Crypto as digital asset under IT Act |
| Trading | Regulated | FIU-IND registration required |
| Taxation | High Flat | High Flat 30% capital gains tax, 1% TDS |
| Payment Use | Prohibited | Crypto not accepted as legal tender |
| Innovation Climate | Strong | 100+ Indian crypto/blockchain startups raised funding in 2024 |
How Can Crypto Firms in India Stay Compliant?
Crypto companies in India must prioritize AML compliance by following these measures:
- All virtual digital asset (VDA) service providers must register with the FIU-IND.
- Platforms must have advanced tools for real-time AML screening.
- Firms must conduct ongoing KYC processes.
- Properly maintaining suspicious activity logs is a must.
- Crypto firms must use automated tools for risk management.
Sanction Scanner makes AML compliance simple. Our professional team offers the best services that include; Real-time name screening, Politically Exposed Person (PEP) checks, Negative media detection, KYC/AML integration via Application Programming Interface (API) and customizable dashboard for crypto firms. Our services are tailored just for the crypto industry. Partner with Sanction Scanner today and stay one step ahead in reducing risks, increasing transparency and achieving seamless compliance in India’s dynamic crypto market.
FAQ's Blog Post
Yes, cryptocurrency is legal to own and trade in India, but it is not recognized as legal tender. It is regulated as a Virtual Digital Asset (VDA) under the Income Tax Act.
The Reserve Bank of India (RBI) does not support cryptocurrency as legal currency, but it allows regulated entities to facilitate crypto-related transactions under specific KYC and AML norms.
Crypto gains are taxed at 30% flat on profits, with an additional 1% TDS (Tax Deducted at Source) on transactions exceeding a certain threshold, as per the 2022 budget law.
Yes, crypto exchanges can legally operate in India if they comply with the Financial Intelligence Unit (FIU-IND) registration, KYC verification, and AML/CFT regulations.
No, Bitcoin and other cryptocurrencies are not accepted as legal tender in India and cannot be used directly for purchasing goods or services.
VDA stands for Virtual Digital Asset. It is the legal classification used in India for cryptocurrencies, NFTs, and certain tokens under the Income Tax Act.
Yes, compliant Indian exchanges are expected to follow the FATF Travel Rule by collecting and sharing sender and receiver information during crypto transfers.
Indian users can access international exchanges, but these platforms must also comply with Indian KYC/AML rules and are subject to scrutiny by FIU-IND.