Is crypto trading legal in India in 2025? With the increase in crypto adoption, government policies are also changing rapidly. Over 119 million crypto owners in India are active in 2025; nonetheless, regulations and policies remain complex. That being said, India is trying to find a balanced framework between the large crypto market and investor protection.
The Supreme Court of India has asked the government to come out with clear policies on regulating virtual digital assets. The important question, ‘is crypto legal in India?’ remains a topic of discussion due to undefined laws.
In this blog, we have examined India’s current legal status, simplified the legal jargon, including regulations stated by RBI and FIU-IND, and addressed the legal status of crypto over the past 7 years.
Read more: India Assessment of Global Crypto Regulations
Crypto Legal Status in India in 2025
In 2025, Bitcoin and other digital assets are considered as Virtual Digital Assets (VDAs) under the Income Tax Act, 1961. This allows investors to buy, sell, and hold crypto in India. However, crypto assets do not hold the status of legal tender; that is, they cannot be used to replace fiat money for payments, nor can they be exchanged for payments or wages.
Activities permissible:
- Legal to buy, sell, and hold crypto in India.
- Crypto traders can trade only on registered domestic and international exchanges that comply with Indian laws and guidelines.
- Legal to invest in Bitcoin and digital assets as a part of a diversified portfolio.
Prohibited Activities:
- Use of crypto as a legal form of payment for services, goods, or salaries.
- Non-registered exchange or wallet operation.
- Engagement in anonymous or criminal transactions with the intent of tax evasion.
This framework demonstrates a careful, prudent approach comprised of weighing the value attributed to crypto development and regulatory oversight for purposes of long-term expansion and fiscal solvency.
RBI Crypto 2025 Framework
The Reserve Bank of India (RBI) has put in place an inclusive framework for governing digital assets, which is a huge shift from previous prohibitions. The following key features include:
1. Digital Rupee Expansion
India’s Central Bank digital currency (CBDC), the Digital Rupee (e₹), has spread its wings, functioning now in retail as well as wholesale payments as a pilot project. It aimed to simplify transactions on digital wallets and QR codes. Unlike private crypto assets, the government-issued digital currency is regulated tightly, and its utilization is advocated as a safe digital channel.
2. Banking Regulations and Compliance
Banks may offer services related to crypto, but strictly under regulations to avoid systemic risk. Banks will have to maintain accounts that are segregated, perform strengthened due diligence, and track transactions stringently. Notably, banks cannot trade or invest in crypto.
3. New Reporting Norms
Financial institutions and crypto exchanges are now mandated to report all crypto-related transactions exceeding ₹10,000 to the Financial Intelligence Unit – India (FIU-IND). They must maintain detailed records, including transaction histories and crypto-to-fiat conversions.
Overall Approach
This architecture is designed to balance innovation and regulation, fostering transparency, minimizing risks, and allowing a regulated digital asset environment. Although private crypto is still an investment class, the emphasis on CBDC and regulated exchange provides stability and oversight.
New Reporting Norm for Virtual Digital Assets (VDA) Transactions
One of the landmarks for the Indian crypto space was when India enforced strict reporting protocols:
- All transactions above ₹10,000 are required to be reported to FIU-IND.
- Exchange accounts must keep records for every transaction and holding.
- Suspicious transactions must be reported and flagged using Suspicious Transaction Reports (STRs).
- Regular compliance submissions by exchanges and wallet providers are required.
These measures further cement India’s commitment towards anti-money laundering (AML) and combating illegal activity, with the regulation of digital assets harmonized to global standards, such as FATF guidelines.
Legal Status on Crypto (2018–2025)
Between 2018 and 2025, the Indian government introduced numerous reforms in crypto policies and legislation.
- 2018: The RBI ban on crypto exchanges halted the majority of crypto exchanges in India.
- 2020: The Supreme Court canceled the RBI ban, and crypto trading was legalized in India.
- 2021: Budget recommended a flat tax of 30% on crypto gains and a ceiling of 1% TDS.
- 2022: Introduction of regulation guidelines, such as TDS and definition of VDAs.
- 2023: Crypto exchanges’ registration by FIU-IND; PMLA control made stricter.
- 2024: The Supreme Court requested a blanket law, asking for clear policies.
- 2025: RBI prolonged the pilot of the Digital Rupee; trading of crypto allowed but strictly regulated.
This is India’s gradual but unyielding journey from prohibitions and restrictions to disciplined regulation.
30% Flat Tax on Crypto Gains
In Budget 2025, India maintained a 30% flat tax on every crypto asset gain with a 4% cess. This would cover profits earned through trading, exchanging, or retaining digital assets like Bitcoin and Ethereum. No deductions other than the cost of acquisition are permissible, and losses cannot be offset against gains.
This stable tax policy streamlines reporting but highlights the need for careful record-keeping for every transaction.
Crypto Exchanges: Licensing and Compliance
India made it compulsory for crypto exchanges to get registered with FIU-IND under the PMLA for AML compliance monitoring. They would be required to maintain detailed data of all users, keep a record of their KYC, and file periodic reports on high-value transactions. This regime of licensing is aimed at establishing a safe and compliant marketplace, filtering out illicit activities.
FIU-IND Registration for Crypto Platforms
A crypto wallet and exchange must:
- Perform full KYC verification for every user.
- Maintain complete reports of transactions.
- Report for suspicious transactions and large transactions.
- Work with law enforcement when called upon.
These all increase transparency and, therefore, increase confidence in investors and regulators.
Risks and Challenges in Crypto Legality in India
While crypto regulations in India have added some clarity, there are still significant challenges:
- Market volatility still presents some financial risk to investors.
- Fraudulent schemes, fraud, and fake tokens represent a threat to investor safety as well.
- Regulatory compliance costs could discourage smaller players.
- Regional and international compliance is a barrier to cross-border transactions.
Therefore, investors must be aware of these risks, stay compliant, and use reputable, registered platforms like ZebPay.
The Future of Crypto Law and Regulation in India
India’s approach in 2025 appears to be indicative of a balanced regulatory outlook. There is ongoing discussion on various aspects, including regulations, taxation, and security of digital assets.
India is also exploring a regulatory sandbox for DeFi, NFTs, and a range of other blockchain innovations as part of their National Blockchain Strategy. India is likely trying to engage with global regulators to align its regulatory framework with certain global standards. India is preparing itself to be a global market player in Web3 and digital assets.
In the grand scheme of things, ZebPay blogs are here to provide you with crypto wisdom. Get started today and join 6 million+ registered users to explore endless features on ZebPay!
