India Crypto Compliance — FIU-IND & PMLA Registration 2026

Overview — Operating Crypto in India

India is one of the world's largest potential crypto markets, with an estimated 100 million or more users and a population of 1.4 billion. However, it is not an "offshore-friendly" jurisdiction. If you intend to serve Indian users or operate a crypto business within India, you are subject to a demanding compliance framework — and a tax regime that is among the most punishing globally for crypto activity.

There is no single "crypto license" in India. The operative mechanism is VASP registration with the Financial Intelligence Unit — India (FIU-IND), which became mandatory in March 2023 following an amendment to the Prevention of Money Laundering Act (PMLA). Any entity offering crypto exchange, custody, or transfer services to Indian users must complete this registration or risk enforcement action.

India's approach is best understood as a compliance-first framework: VASPs must register, implement AML/KYC programs, report suspicious transactions, and comply with the Travel Rule — but there is no formal licensing regime with an approval/rejection decision on product legality. The registration is essentially a notification and AML obligation.

Major Indian exchanges — CoinDCX, WazirX, CoinSwitch, and Zebpay — are all FIU-IND registered and operate under this framework. International exchanges seeking to serve Indian users have also registered, though some have faced challenges with banking access.

Legal Framework — Key Laws & Regulations

India's crypto regulatory framework is built on existing financial law rather than purpose-built crypto legislation. The key instruments are:

Prevention of Money Laundering Act (PMLA), 2002 — as Amended March 2023

The March 2023 amendment to PMLA is the single most important development in India's crypto regulation. It brought Virtual Digital Assets (VDAs) — India's term for crypto assets — formally within the PMLA's scope. This means:

• All VDA service providers are "Reporting Entities" under PMLA
• Mandatory AML/CFT program implementation
• KYC obligations for all customers
• Suspicious Transaction Reporting (STR) to FIU-IND
• Cash Transaction Reporting (CTR) obligations
• Record-keeping for a minimum of 5 years
• Travel Rule compliance for VDA transfers

Finance Act 2022 — Crypto Taxation Framework

The Finance Act 2022 introduced a dedicated crypto tax framework effective April 1, 2022. Key provisions include:

• 30% flat tax on income from transfer of VDAs (no deductions except cost of acquisition)
• 1% Tax Deducted at Source (TDS) on VDA transactions above INR 50,000 per year (INR 10,000 for specified persons)
• No set-off: losses from one VDA cannot be offset against gains from another
• No loss carry-forward for VDA losses
• Gifts of VDAs taxable in the hands of the recipient

Foreign Exchange Management Act (FEMA)

FEMA governs cross-border crypto transactions. The Enforcement Directorate (ED) enforces FEMA and has investigated multiple crypto exchanges for alleged FEMA violations, including WazirX. Foreign investment in Indian crypto companies is subject to FEMA rules and FDI policy.

No Dedicated Crypto Law

India has been working on a Cryptocurrency and Regulation of Official Digital Currency Bill since 2021, but as of 2025, no dedicated crypto law has been enacted. The government has instead opted to regulate crypto through existing financial legislation while awaiting global regulatory consensus (particularly the IMF/FSB synthesis paper framework).

Registration Requirements — Who Must Register with FIU-IND

Under the PMLA as amended in 2023, the following entities must register with FIU-IND as Reporting Entities for Virtual Digital Assets:

FIU-IND Registration: What It Entails

FIU-IND registration is not a license in the traditional sense — it is a compliance registration. Approved entities receive a registration number confirming they are a recognized Reporting Entity. The registration requires:

• Corporate entity registered in India (or foreign entity with Indian operations)
• Designated Principal Officer responsible for PMLA compliance
• Designated Director (senior management responsibility)
• Implemented AML/CFT policy and procedures
• KYC system in place (with CERSAI/CKYCR integration for individual clients)
• Technology systems for STR/CTR reporting to FIU-IND
• Staff training program for AML/CFT

SEBI's Evolving Role

The Securities and Exchange Board of India (SEBI) has been engaged in discussions about regulating crypto assets that qualify as securities. In 2023, SEBI recommended that multiple regulators (including SEBI and IRDAI) could regulate different crypto asset categories. This framework is still evolving and may result in additional licensing requirements for securities-like tokens.

Compliance Requirements in Detail

KYC / Customer Due Diligence

All Indian VASPs must conduct full KYC on customers in line with RBI KYC Master Direction and PMLA rules:

• Individual customers: PAN card (mandatory for transactions above INR 50,000), Aadhaar (or other OVD), photograph, address proof, income source for large transactions
• Corporate customers: Certificate of incorporation, MoA/AoA, list of directors, beneficial ownership (UBO) identification (entities with 10%+ ownership)
• Enhanced Due Diligence (EDD): Required for high-risk customers, PEPs, cross-border transactions
• Ongoing monitoring: Transaction monitoring systems; periodic KYC refresh
• Video-KYC (V-CIP): Permitted as alternative to in-person KYC

Transaction Reporting Obligations

• Suspicious Transaction Reports (STR): Must be filed with FIU-IND within 7 days of becoming aware of suspicious activity
• Cash Transaction Reports (CTR): For cash transactions above INR 10 lakh (about USD 12,000)
• Non-Profit Organization Transaction Reports (NTR)
• Cross-Border Wire Transfer Reports (CBWTR)
• All reports filed electronically through FIU-IND's reporting portal

Travel Rule Compliance

India adopted Travel Rule obligations for VDAs under PMLA. For transfers above the threshold, VASPs must collect and transmit originator and beneficiary information — including name, account number/wallet address, and physical address or national identity number. Compliance with FATF Travel Rule standards is required.

Record Keeping

All transaction records and KYC documentation must be maintained for a minimum of 5 years from the date of transaction or cessation of business relationship. Records must be available to FIU-IND, ED, and other competent authorities upon request.

Application Process — FIU-IND VASP Registration

The FIU-IND registration process is conducted through the FIU-IND online portal. The typical timeline is 2 to 4 months from submission to confirmation of registration.

1. Corporate setup: Incorporate a Private Limited Company or LLP in India (or identify the existing Indian entity). Ensure the entity's objects clause covers VDA activities. Appoint directors including at least one Indian resident director.
2. Compliance framework development: Draft and implement an AML/CFT policy document, KYC procedures manual, internal audit framework, and STR/CTR reporting procedures. Appoint a Principal Officer and Designated Director.
3. Technology & systems readiness: Deploy KYC verification systems, transaction monitoring software, and FIU-IND reporting portal integration. Conduct internal testing of reporting workflows.
4. Staff training: Conduct documented AML/CFT training for all relevant staff. Maintain training records. Senior management awareness sessions required.
5. FIU-IND portal registration: Create entity account on the FIU-IND reporting portal (fiuindia.gov.in). Submit registration details including entity information, Principal Officer details, business activities, and compliance documentation.
6. Document submission: Upload supporting documents: certificate of incorporation, MoA/AoA, board resolution appointing Principal Officer, AML policy, and details of IT systems used for compliance.
7. FIU-IND review: FIU-IND reviews the submission. May request additional information or clarifications. No formal interview or site visit in most cases.
8. Registration confirmation: Upon approval, FIU-IND issues a registration number. The entity is now a recognized Reporting Entity under PMLA and can commence or continue operations with full legal standing.

Costs — Registration & Ongoing Compliance

Unlike jurisdictions with formal license fees, FIU-IND registration itself does not carry a substantial government fee. However, the true cost of operating a compliant crypto business in India includes substantial compliance infrastructure investment.

Tax Implications for Operators

Corporate tax for domestic Indian companies is 25.17% (including surcharge and cess). Foreign companies operating in India are taxed at 40% plus applicable surcharges. Exchange income earned in India is subject to these rates. Additionally, if the exchange holds crypto as inventory, the 30% VDA tax may apply to realized gains on those holdings.

Operators must also deduct and deposit 1% TDS on all qualifying customer transactions — this creates significant cash flow and administrative overhead, as TDS must be remitted to the government on behalf of customers monthly.

India vs. Other Asia-Pacific Crypto Jurisdictions

India's regulatory framework is best compared to other major Asian markets. Note that India is a market-access play — not a favorable licensing jurisdiction.

Frequently Asked Questions