In recent years, India’s stance on digital assets has shifted from uncertainty to cautious regulation. From Reserve Bank advisories to tax enforcement and anti-money laundering controls, the legal landscape is evolving rapidly. Yet for investors, exchanges, or developers, a pressing question remains is crypto legal in India in 2025?
This guide explores the most recent regulatory updates, the impact of the RBI’s position, how cryptocurrencies are governed under the PMLA, and what the new tax rules mean for individuals and businesses operating in this sector.
India’s Regulatory Journey: From RBI Circulars to Legal Acceptance
In 2018, the Reserve Bank of India issued a now-defunct circular banning banks from offering services to crypto-related businesses. While this move created significant disruption in the market, the Supreme Court of India quashed the RBI’s decision in March 2020. This marked a turning point, allowing virtual digital assets (VDAs) to operate within a cautiously optimistic legal framework.
Since then, India has not declared cryptocurrencies as legal tender, but it has stopped short of banning them. Instead, regulators have adopted a middle-ground approach monitoring activity, introducing strict compliance norms, and applying tax and anti-fraud legislation.
Taxation of Cryptocurrency in India (As of 2025)
The Indian government took a definitive step in 2022 by introducing a 30% flat tax on crypto gains, with no allowances for deductions or set-offs. Additionally, a 1% TDS (tax deducted at source) is levied on all transactions exceeding a certain threshold. As of the 2025 update:
- 30% tax continues to apply to all profits from the sale of VDAs.
- 1% TDS remains mandatory for each trade, including P2P platforms and decentralised exchanges.
- Gifts of cryptocurrencies above ₹50,000 are treated as taxable income unless received from a relative.
The tax regime sends a clear message—crypto is not illegal, but it is certainly under the scanner.
Crypto Under the PMLA: New Compliance Burdens
A major shift came in 2023 when the Indian government brought crypto entities under the Prevention of Money Laundering Act (PMLA). This development placed digital asset platforms on par with other reporting entities like banks and financial institutions.
Under the PMLA:
- Exchanges and wallet providers must conduct KYC (Know Your Customer) verification.
- Suspicious transactions must be reported to the FIU-IND (Financial Intelligence Unit – India).
- Records of transactions must be maintained for five years and shared with authorities upon request.
For startups and foreign exchanges eyeing the Indian market, obtaining FIU-IND Registration Services is now a non-negotiable step. Failure to comply can result in operational bans and legal scrutiny.
What the RBI Says Today About Cryptocurrencies?
While the RBI remains sceptical of cryptocurrencies, it has pivoted its approach from blanket restrictions to regulatory oversight. The central bank supports the development of a Central Bank Digital Currency (CBDC) while simultaneously cautioning users against private digital assets.
As of 2025, there are no active RBI restrictions on owning or trading crypto in India—provided users and businesses adhere to applicable tax and anti-money laundering rules.
Legal Risks and the Role of Specialised Crypto Lawyers
Despite the regulatory structure becoming more defined, numerous grey areas persist. Issues arise around token classification, exchange compliance, cross-border capital controls, and scam-related litigation. Investors and entrepreneurs increasingly turn to cryptocurrency lawyers who specialise in digital asset law, compliance, and dispute resolution.
These legal professionals assist in:
- Drafting compliant token sale documents
- Navigating taxation and reporting requirements
- Handling litigation involving fraud or asset recovery
Similarly, businesses building on distributed technologies often seek advice from blockchain lawyers, especially when developing smart contracts, launching DeFi platforms, or tokenising real-world assets under Indian jurisdiction.
So, Is Crypto Legal in India in 2025?
The answer is yes, but with conditions. Cryptocurrencies are not banned in India, nor are they considered legal tender. However, trading, holding, and investing in VDAs is legal as long as individuals and entities follow applicable tax laws, AML requirements, and exchange reporting duties.
It is a heavily regulated space, not a prohibited one. India’s approach in 2025 reflects a global trend recognising digital assets as part of the financial ecosystem while imposing stricter legal oversight.
Final Thoughts
As India continues to refine its approach to virtual assets, stakeholders must remain alert and well-informed. Regulation is here to stay, and non-compliance could lead to penalties, account freezes, or criminal action. Whether you’re an investor, developer, or business owner in the digital space, working with experts in crypto law is now more important than ever.
Frequently Asked Questions (FAQs)
1. Is cryptocurrency legal in India in 2025?
Yes, cryptocurrency is legal to hold and trade in India in 2025, provided users comply with tax regulations, RBI advisories, and PMLA-based KYC and AML obligations.
2. What are the tax rules for crypto in India in 2025?
Crypto gains are taxed at 30% with a 1% TDS on transactions. No deductions are allowed, and gifts above ₹50,000 may also be taxable unless exempted.
3. Does the RBI ban cryptocurrency in India?
No. The Reserve Bank of India does not ban cryptocurrency but maintains a cautious stance. It encourages compliance and warns against investment risks.
4. What is FIU-IND registration for crypto businesses?
FIU-IND registration is mandatory under the PMLA for crypto exchanges and platforms operating in India. It ensures monitoring, KYC compliance, and AML reporting.
5. Do I need a lawyer for crypto-related matters in India?
Yes, consulting experienced cryptocurrency or blockchain lawyers is advisable to handle legal compliance, asset recovery, taxation, or dispute resolution effectively.
Mr. Brijender Chahar
Senior Advocate, Supreme Court of India