India's crypto regulations: A timeline of legal changes

Most Indians believe crypto is illegal in India. That belief is wrong, but the confusion is understandable. Over the past decade, the Reserve Bank of India and the central government have alternately banned, allowed, taxed, and warned against cryptocurrency. The legal status has shifted multiple times, and each shift has reshaped how Indians can hold and trade digital assets.

This is the complete timeline of India's crypto regulation, with the events, dates, and implications laid out clearly so you understand exactly where the law stands today.

Phase 1: The early grey years (2013 to 2017)

Bitcoin began trading in India around 2013. The Reserve Bank of India issued the first cautionary advisory in December 2013, warning users about the risks of virtual currencies. There was no ban, no licensing, and no specific tax treatment.

During this period, exchanges like Zebpay, Unocoin, and Coinsecure operated informally. Investors paid income tax on gains under regular slab rates because no specific crypto rules existed.

Phase 2: The RBI banking ban (2018 to 2020)

April 2018: RBI bans banks from servicing crypto businesses

The RBI issued a circular telling banks to stop providing services to entities dealing in virtual currencies. This effectively shut off rupee-to-crypto bank transfers.

Indian crypto exchanges responded by introducing peer-to-peer (P2P) trading models that bypassed the banking ban. Many users moved offshore to international exchanges.

March 2020: Supreme Court strikes down the RBI ban

The Internet and Mobile Association of India challenged the RBI circular. The Supreme Court overturned the banking ban, calling it disproportionate. Banks resumed crypto-related services within weeks.

Phase 3: Open trading and rapid growth (2020 to 2022)

From mid-2020 to early 2022, crypto trading volumes in India exploded. Exchanges like WazirX and CoinDCX grew rapidly. Approximate Indian crypto holders rose from a few hundred thousand to over 100 million.

The government did not ban anything during this phase. There was, however, no clear tax framework. Different chartered accountants advised different approaches.

India recorded one of the world's fastest crypto adoption curves between 2020 and 2022. By early 2022, Indian users held an estimated 6 to 7 lakh crore rupees worth of digital assets across major exchanges, ranking among the top 5 countries globally by holdings.

Phase 4: The taxation framework arrives (2022)

April 2022: 30 percent tax on crypto gains takes effect

The Union Budget 2022 introduced a flat 30 percent tax on gains from virtual digital assets. Key features:

• Flat 30 percent rate, no slab variation
• No deduction for any expenses except cost of acquisition
• Losses cannot be set off against any other income
• Losses cannot be carried forward

July 2022: 1 percent TDS on crypto transactions

A 1 percent tax deducted at source (TDS) on every crypto transaction took effect. Exchanges had to collect and deposit this with the government.

The 1 percent TDS reduced trading volumes on Indian exchanges by over 70 percent within months. Many active traders moved to international platforms.

Phase 5: Anti-money laundering rules and global pressure (2023 to 2024)

March 2023: Crypto brought under PMLA

The government brought all virtual digital asset transactions under the Prevention of Money Laundering Act. Exchanges and intermediaries had to register with the Financial Intelligence Unit (FIU) and follow KYC and reporting rules.

December 2023 onwards: FIU enforcement on offshore exchanges

FIU India issued notices to several offshore exchanges (Binance, Kucoin, OKX, and others) that served Indian users without local registration. Many were temporarily blocked. Most have since either registered locally or formally exited the Indian market.

Phase 6: The current state (2025 to 2026)

As of 2026, the Indian crypto regulation landscape has these features:

• Crypto is legal to hold and trade
• 30 percent tax on all gains, plus applicable surcharge and cess
• 1 percent TDS on every transaction
• All exchanges operating in India must register with FIU under PMLA
• Crypto assets must be declared in your tax return under Schedule VDA
• Foreign holdings of crypto must be disclosed under Schedule FA, like other foreign assets

What is still missing from Indian crypto regulation

1. No primary legislation

India still has no dedicated crypto law equivalent to the SEBI Act or RBI Act. The current framework is a patchwork of tax rules and PMLA notifications.

2. No investor protection framework

If a registered crypto exchange fails (as WazirX faced in 2024 with hacking and operational issues), there is no formal compensation mechanism for affected users.

3. No spot ETF or institutional product

Unlike the United States and several other markets, India has not approved a spot Bitcoin or Ethereum ETF. Mutual funds also cannot hold crypto directly.

4. Unclear treatment of staking and DeFi

Income from staking, lending, or providing liquidity in decentralized finance protocols sits in a tax grey area. Most CAs advise classifying it as other income at slab rates, but no specific guidance exists.

What this means for Indian crypto investors

1. Trade only on FIU-registered exchanges. Offshore unregistered exchanges face blocking risk and tax-reporting complications.
2. Account for the full 30 percent tax when planning trades. Frequent trading is uneconomic given the 1 percent TDS plus tax structure.
3. Disclose holdings in your tax return under Schedule VDA. Non-disclosure can attract heavy penalties under the Black Money Act.
4. Maintain detailed transaction records. Cost of acquisition and date of purchase are needed for every trade in your tax filing.
5. Watch for primary legislation. A dedicated crypto law is widely expected in coming years. It will likely tighten investor protection but may also tighten reporting and compliance.

For RBI advisories and the latest official guidance, see rbi.org.in and the Income Tax Department portal at incometax.gov.in.

Frequently asked questions

Is cryptocurrency legal in India in 2026?

Yes. Crypto is legal to hold and trade, but is taxed at 30 percent on gains plus 1 percent TDS on each transaction. There is no comprehensive crypto law yet, only a tax and anti-money laundering framework.

What is the tax on crypto gains in India?

A flat 30 percent on all gains, plus applicable surcharge and cess. No expenses can be deducted except the original cost of acquisition.

Can I claim losses on crypto trades against other income?

No. Crypto losses cannot be set off against any other income, and they cannot be carried forward to future years either.

Do I need to declare foreign crypto holdings in my Indian tax return?

Yes. Crypto held on foreign exchanges or in self-custody wallets falls under Schedule FA disclosure rules, similar to other foreign assets.