Blockchain, Crypto & Web3

Yes. The Supreme Court struck down the RBI’s 2018 circular that had effectively banned cryptocurrency transactions in the landmark Internet and Mobile Association of India v. Reserve Bank of India (2020) decision. Cryptocurrency is not banned in India. However, it is heavily regulated and taxed. A 30% tax applies on income from the transfer of virtual digital assets, with a 1% TDS on transactions above specified thresholds. There is no set-off of losses against other income, and losses from crypto transactions cannot be carried forward. The regulatory framework continues to evolve, and we advise clients on operating within the current legal and tax structure.

Yes. The Ministry of Finance issued a gazette notification in March 2023 bringing virtual digital asset service providers (VDA SPs) under the ambit of the Prevention of Money Laundering Act, 2002. All VDA SPs, including exchanges, wallet providers, and custodians operating in or offering services to Indian users, must register with the Financial Intelligence Unit India (FIU-IND) and comply with KYC, AML, and reporting obligations. Non-compliance can result in penalties and criminal prosecution. The FIU-IND has already taken enforcement action against offshore exchanges that failed to register. We assist clients with FIU-IND registration and ongoing AML compliance.

Income from the transfer of virtual digital assets (VDAs) is taxed at a flat rate of 30% under Section 115BBH of the Income Tax Act. A 1% TDS is deducted at source under Section 194S on transfers above the prescribed threshold. No deductions are allowed against this income other than the cost of acquisition, and losses from VDA transfers cannot be set off against any other income or carried forward. The definition of VDA is broad and covers cryptocurrency, NFTs, and any other digital asset notified by the government. Gifts of VDAs are also taxable. We advise clients on tax structuring and compliance for crypto transactions and businesses.

Token offerings in India must navigate securities law, tax law, consumer protection, and anti-money laundering regulations. Whether a token is classified as a security depends on its characteristics and the rights it confers, and this classification determines the regulatory framework that applies. Utility tokens, governance tokens, and security tokens each carry different legal implications. We advise on the legal characterisation of tokens, whitepaper review and compliance, offering structure, investor disclosures, KYC/AML obligations, and cross-border considerations. For offerings targeting investors outside India, additional jurisdictional analysis is required.

NFT projects raise issues across IP law, contract law, consumer protection, data privacy, and tax. Key considerations include what rights the buyer actually acquires (ownership of the NFT is not the same as ownership of the underlying IP), how the smart contract terms interact with applicable law, whether the NFT constitutes a virtual digital asset for tax purposes (it almost certainly does), platform terms and marketplace compliance, and whether the content depicted in the NFT infringes third-party IP or personality rights. We advise on the legal wrapper for NFT projects, including terms of sale, IP licensing, and regulatory compliance.

The Foreign Exchange Management Act applies to cross-border transactions involving Indian residents and entities. Crypto businesses that facilitate cross-border transfers, accept foreign investment, or operate across jurisdictions must consider FEMA implications, including whether transactions constitute capital or current account transfers, whether liberalised remittance scheme (LRS) limits apply, and how to structure cross-border fund flows compliantly. The RBI has not issued specific FEMA guidance on crypto, which creates uncertainty. We advise on structuring operations to manage FEMA risk while remaining operationally viable.