Is Crypto Legal in India? India’s Crypto Regulation, Explained

While cryptocurrencies are legal in India as of 2024, the regulations are intricate. This article unpacks the details of taxes, mining, and trading regulations—all to help you understand the current and future state of cryptocurrencies in India.

Is Cryptocurrency in India Legal or Not?

Cryptocurrencies in India have a somewhat complicated legal status. While cryptocurrencies are not officially recognized as legal tender in India, they are not explicitly prohibited either. This ambiguity has created uncertainty in terms of the regulatory framework surrounding cryptocurrencies in the country.

Is Bitcoin Legal in India?

Yes, Bitcoin is legal in India. The Supreme Court of India lifted the Reserve Bank of India’s (RBI) 2018 ban on cryptocurrency transactions in March 2020, recognizing Bitcoin as unregulated but not unlawful.

Bitcoin’s journey in India began in 2012 with the rise of cryptocurrency exchanges. Initially, the RBI was cautious, warning about risks like money laundering and terrorism financing. In 2013, it issued a public advisory highlighting these risks.

In April 2018, the RBI banned banks from dealing with cryptocurrency transactions. This move undoubtedly complicated the conversion of Bitcoin into Indian Rupees so, eventually, the cryptocurrency community challenged this ban in the Supreme Court, which ruled in March 2020 that the RBI’s circular was unconstitutional, thereby lifting the ban.

Afterward, various apps and traders have emerged, allowing legal investment in Bitcoin. Additionally, the RBI announced plans to introduce a central bank digital currency (CBDC), the digital Rupee, signaling India’s growing interest in digital currencies.

In summary, while Bitcoin is legal in India, it operates in an unregulated environment. 

Is Bitcoin Mining Legal in India?

As of 2024, Bitcoin mining is legal in India but exists in a regulatory gray area. There is no specific legal framework for Bitcoin or other cryptocurrency mining.

The Supreme Court’s 2020 decision, which lifted the RBI’s 2018 ban on banking support for crypto, indirectly impacts miners, making it challenging to convert earnings into traditional currency. Concerns about the misuse of cryptocurrencies in illicit activities may lead to future regulations, but currently, mining is not explicitly prohibited.

Is Crypto Trading Legal in India?

Yes, crypto trading is legal in India. Following the Supreme Court’s 2020 decision to lift the RBI’s restrictions, trading and investing in cryptocurrencies like Bitcoin and Ethereum is permitted.

However, these digital currencies are not recognized as legal tender, meaning businesses are not obliged to accept them as payment. While the market has seen growth, investors should remain cautious due to potential risks and regulatory uncertainties.

How Is Crypto Taxed in India?

Initially, cryptocurrencies were not explicitly defined under the Income Tax Act or Goods and Services Tax (GST) regulations in India. However, the Union Budget 2022 brought significant changes. The Finance Minister introduced a tax regime for virtual digital assets, including cryptocurrencies.

According to the Finance Act 2022 and the Union Budget 2022, Bitcoin and other cryptocurrencies are classified as “Virtual Digital Assets.” This categorization implies they are treated akin to intangible assets. Any income derived from the transfer of virtual digital assets is subject to taxation as capital gains.

Bitcoin Mining

Bitcoin mining in India is considered taxable income. The value of the mined Bitcoin is based on its fair market value at the time of receipt, and this income is taxed at a flat rate of 30% plus a 4% cess. Expenses related to mining, such as infrastructure costs, cannot be deducted from the taxable income​.

Trading Bitcoin

Profits from trading Bitcoin are taxed as capital gains at a flat rate of 30% plus a 4% cess. This applies to all gains, regardless of the holding period. Additionally, a 1% Tax Deducted at Source (TDS) is applied to financial transactions exceeding INR 50,000 annually, ensuring tax compliance for larger transactions​​.

Receiving Bitcoin as Gifts

If Bitcoin is received as a gift and its value exceeds INR 50,000, it is subject to a 30% tax. Gifts from relatives up to INR 50,000 are exempt from this tax. The recipient is responsible for paying the tax based on the fair market value of Bitcoin at the time of receipt​​.

Other Activities: Staking and Minting

Rewards from staking or minting cryptocurrencies are treated as income from other sources. The fair market value of these rewards at the time they are received is taxed at 30% plus a 4% cess​.

Tax Deducted at Source (TDS)

A 1% TDS is deducted on the transfer of crypto assets if the total transaction exceeds INR 50,000 in a financial year. This TDS, applicable to all sell transactions, is deducted by exchanges or individuals facilitating the trade, ensuring compliance with tax regulations irrespective of profit or loss​​.

Reporting and Compliance

To comply with Indian tax regulations, individuals must report their crypto transactions accurately. This includes filing the appropriate Income Tax Return (ITR) forms and maintaining detailed records of all transactions. Failure to do so can result in penalties and additional scrutiny from tax authorities​​.

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The History of Crypto Regulation in India

India’s approach to cryptocurrency regulation has evolved significantly over the past decade, reflecting a cautious yet adaptive stance towards digital currencies. Here’s a chronological overview of the key events and milestones in the regulation of cryptocurrencies in India:

2013: Initial Advisory

In December 2013, the Reserve Bank of India (RBI) issued its first advisory on virtual currencies, cautioning users, holders, and traders about the potential risks involved, including financial, operational, legal, and security-related issues. This advisory marked the beginning of regulatory attention towards cryptocurrencies in India.

2017: Renewed Warnings and Formation of IMC

Throughout 2017, the RBI reiterated its warnings, emphasizing that cryptocurrencies were not legal tender and highlighting the associated risks. In the same year, the Indian government established the Inter-Ministerial Committee (IMC) to study virtual currencies and propose regulatory actions, signaling increased governmental interest and concern.

2018: RBI’s Ban on Cryptocurrency Trading

In April 2018, the RBI issued a circular prohibiting banks and regulated financial institutions from providing services related to cryptocurrencies. This directive effectively cut off the link between cryptocurrency exchanges and the traditional banking system, making it difficult for individuals and businesses to convert cryptocurrencies into fiat currency. The ban was driven by concerns over consumer protection, money laundering, and maintaining financial stability​.

2019: Banning of Cryptocurrency and Regulation of Official Digital Currency Bill

Following the RBI’s ban and the IMC’s recommendations, the Indian government introduced the “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019.” The bill sought to prohibit all activities related to private cryptocurrencies, including mining, holding, selling, and trading, and proposed severe penalties for violations. However, it also allowed for the issuance of a digital rupee by the RBI. The bill faced significant criticism for its broad definition and harsh penalties​.

2019: SC Garg Committee Report

The SC Garg Committee was formed to address stakeholder concerns and the increasing investments in cryptocurrencies. The committee’s report highlighted significant security and regulatory concerns, emphasizing the volatility and risks of cryptocurrencies and supporting the proposed ban. However, it acknowledged the potential benefits of blockchain technology​.

2020: Supreme Court Ruling

In March 2020, the Supreme Court of India lifted the RBI’s 2018 ban on cryptocurrency transactions, declaring it unconstitutional. This landmark ruling allowed banks to resume services related to cryptocurrencies, significantly boosting the crypto industry in India and marking a turning point in the regulatory landscape​.

2021: MCA Notification

On March 24, 2021, the Ministry of Corporate Affairs issued a notification mandating companies to disclose their cryptocurrency transactions during a financial year. This move intended to increase transparency and provide the government with data on the extent and nature of cryptocurrency transactions in India.

2021: Introduction of the Cryptocurrency and Regulation of Official Digital Currency Bill

The Indian government introduced the “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021,” aiming to create a framework for the RBI to issue an official digital currency while prohibiting private cryptocurrencies. The bill reflected a shift towards regulation rather than a complete ban, though it has not yet been passed, indicating ongoing debates and potential amendments​​.

2022: Financial Budget

The Financial Budget 2022 proposed taxing digital assets, including cryptocurrencies and non-fungible tokens (NFTs), at a rate of 30% on the transfer of such assets. It also introduced a 1% tax deducted at source (TDS) on payments related to purchasing virtual assets. This move, while not legalizing cryptocurrencies, indicated steps towards strict regulation​​.

2022: Revised Taxation and RBI’s Stance

On June 22, 2022, a circular was issued implementing Section 194S in the Income Tax Act, mandating a 1% TDS on transactions exceeding specific thresholds. The RBI maintained its cautious stance, labeling cryptocurrencies as a ‘clear danger’ due to their speculative nature and potential for misuse​​.

2022: Clarification from the Finance Minister

On July 18, 2022, the Finance Minister clarified that any move towards banning or regulating cryptocurrencies would require international collaboration to prevent regulatory arbitrage. This statement indicated that the proposed 2021 bill would be on hold until a global consensus on cryptocurrency regulation could be achieved.

2023: Anti-Money Laundering Notification

On March 7, 2023, the Ministry of Finance issued a notification bringing cryptocurrency transactions under the ambit of the Prevention of Money-Laundering Act (PMLA) 2002. This notification mandates that all crypto businesses (“virtual asset service providers,” “virtual asset exchange providers,” and “custodian wallet providers”) in India must comply with anti-money laundering standards, including maintaining records of transactions for ten years and performing KYC (Know Your Customer) procedures for all clients. This move is afoot to enhance regulatory oversight, reduce financial crimes, and align with global best practices.

2024: Current State of Regulations

As of 2024, regulations governing the buying and selling of Bitcoin and other cryptocurrencies in India are still being formulated. The government has shown interest in regulating the crypto market to protect investors and prevent money laundering. However, the lack of clarity in regulations poses a challenge for businesses in the crypto industry, leading to uncertainty and decreased investor confidence.

In an interview with CoinDesk, Jayant Sinha, Chair of the Standing Committee on Finance in India’s Parliament, mentioned that global standards for cryptocurrencies are still evolving. He noted that with 2024 being an election year in many key countries, including India, significant regulatory advancements might be delayed. Sinha emphasized the need for international collaboration to effectively regulate the crypto market​.

Legal Status of Cryptocurrency in Other Countries

Cryptocurrency regulations and legal status vary significantly across different countries. Although some nations have embraced the digital currency revolution with supportive regulations, others have imposed severe restrictions or even banned cryptocurrencies altogether.

In the United States, cryptocurrencies are viewed as legal investments and are subject to regulations by various financial authorities. They are not considered legal tender but are treated as taxable assets, subject to capital gains taxes. States like Wyoming have enacted crypto-friendly legislation, promoting a favorable environment for blockchain innovation.

In contrast, China has taken a more restrictive approach. Cryptocurrency exchanges were banned in 2017, making it illegal to trade cryptocurrencies using the Chinese Yuan. However, owning and mining cryptocurrencies remain legal, reflecting a cautious yet controlled acceptance of the technology.

Japan stands out for recognizing cryptocurrencies as legal tender and introducing a licensing system for cryptocurrency exchanges. This regulatory clarity has allowed regulated exchanges to operate securely, fostering a robust environment for crypto trading and innovation.

Switzerland is known for its proactive stance, with the city of Zug, dubbed “Crypto Valley,” offering a comprehensive regulatory framework. Cryptocurrencies are recognized as a valid form of payment, and there are no capital gains taxes on individual crypto investments, so it’s only natural that Switzerland is a highly attractive destination for blockchain businesses.

Singapore supports blockchain innovation with a clear regulatory framework and no capital gains taxes on cryptocurrency investments. Businesses involved in crypto trading are taxed as regular income: Singapore is not named a global financial hub with a progressive approach towards digital assets for nothing, after all.

Malta, often referred to as “Blockchain Island,” has established comprehensive regulations and offers significant tax benefits, including exemptions from long-term capital gains taxes on crypto investments. This makes it an appealing destination for investors and crypto businesses alike.

Portugal has embraced cryptocurrencies by offering tax-free policies for individual investors on gains from crypto transactions. However, from 2023, certain crypto transactions are subject to a 28% tax, balancing between encouraging innovation and regulating the market.

Estonia is known for its advanced digital infrastructure and supportive regulatory environment. The country offers a licensing system for crypto exchanges and wallet providers and has low corporate tax rates without capital gains tax on digital assets, attracting blockchain startups.

El Salvador made history by adopting Bitcoin as legal tender. This groundbreaking move exempts Bitcoin transactions from capital gains tax, aiming to encourage its use and attract crypto entrepreneurs.

Germany provides favorable tax treatment for cryptocurrency investments. Individuals holding cryptocurrencies for over a year enjoy tax-free profits; earnings below 600 euros are also tax-exempt. Germany’s progressive approach includes stringent regulations to prevent fraud and money laundering.

The United Arab Emirates (Dubai) offers zero income tax on crypto investments and has introduced free zones specifically for digital and virtual asset companies. No surprise that the UAE has gained a reputation as a highly attractive destination for international crypto businesses.

Georgia provides a favorable tax regime for cryptocurrency enthusiasts, with personal crypto gains not subject to income tax. The country actively supports blockchain technology, reshaping itself as a welcoming hub for digital currency activities.

Overall, the legal status of cryptocurrencies around the world is a complex and rapidly evolving landscape.

FAQs on Cryptocurrency in India

Can I buy Bitcoin in India?

Yes, you can buy Bitcoin in India. Here on Changelly, you can purchase Bitcoin using Indian Rupees (INR)—click here to create an order.

Can I convert Bitcoin to cash in India?

Yes, you can convert Bitcoin to cash in India.

Will crypto be legal in India?

Cryptocurrencies are already legal in India. However, they are not considered legal tender. This means you can hold, buy, and sell cryptocurrencies legally, but they cannot be used to pay taxes or legal fines. The government continues to work on a comprehensive regulatory framework, which is expected to be clearer by 2025​.

Is Binance banned in India?

Binance is not banned in India, but it faces regulatory challenges. The government has taken steps to ensure compliance with tax and anti-money laundering laws, which has affected the operations of several foreign crypto exchanges, including Binance. As a result, Binance and other foreign exchanges are working to align with local regulations​.

Will Binance come back to India?

Binance has expressed its commitment to adhering to local regulations and maintaining communication with Indian regulators. Even though there is no specific timeline, Binance and other exchanges are likely to re-establish their presence in India once they meet the necessary compliance requirements. Updates from these exchanges will be shared through their official channels​.


Despite the lack of clear legal status, the crypto market in India continues to grow. Exchanges and investors are navigating this uncertain environment in the hope that the day for clearer regulations will come. The government’s delay in passing the bill suggests a possible shift towards a more nuanced regulatory approach, rather than an outright ban.

Overall, the Indian crypto market has potential, but the legal status and regulatory framework need further clarity to ensure a stable and secure environment for investors and startups. Clear regulations can help foster growth, attract investments, and encourage innovation in the Indian crypto industry.

Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.