Ask a lawyer whether crypto is legal in India, and you’ll get a slightly unsatisfying answer: yes, technically, but mostly because nobody’s banned it. There’s still no dedicated law governing digital assets, and that gap has become harder to ignore as trading volumes climb and courts keep asking the government, more or less publicly, to do something about it.

How we got here

Start with the RBI’s 2018 circular, which stopped banks from servicing crypto exchanges and more or less froze the industry overnight. The Supreme Court struck it down in 2020, in Internet and Mobile Association of India v. Reserve Bank of India, ruling the restriction was disproportionate. Banking access came back, and crypto trading has technically been legal ever since.

Instead of legislating, the government taxed. Since 2022, crypto gains have carried a flat 30% tax, plus a 1% TDS on transactions, with digital assets formally classified as “Virtual Digital Assets” under the Income Tax Act. A comprehensive crypto bill, one reportedly aimed at banning private cryptocurrencies outright, was drafted but never made it to Parliament. It’s since been quietly shelved.

Where things stand in 2026

Buying, selling, and holding crypto remains legal for Indian residents. But a few things are true at once:

• It’s not legal tender. You can’t use it as currency; the RBI still says only the rupee, digital or otherwise, counts.
• Exchanges have to register with FIU-IND and follow anti-money laundering rules, KYC, suspicious transaction reporting, the works.
• There’s no single regulator. Oversight is split between the Finance Ministry (policy and tax), the RBI (monetary stability, plus its own Digital Rupee pilot), the FIU (compliance), and possibly SEBI down the line, which has floated regulating tokens that function more like securities.
• Banks can work with crypto accounts, but with strict due diligence and a flat prohibition on banks holding or investing in crypto themselves.

Courts keep pushing back

Judicial frustration with this vacuum has become something of a pattern. In hearings tied to a Bitcoin investigation, the Supreme Court has openly pressed the government on the obvious contradiction: you tax this at 30%, but you won’t regulate it? High Courts have chimed in too; the Orissa High Court asked the government to clarify crypto’s legal status in a case involving frozen bank accounts. And the Madras High Court has gone a step further, treating digital assets as legally recognized property, which at least gives investors firmer ground to stand on when things go wrong, even without a dedicated statute.

Why the delay?

Some of it is genuine caution about financial stability risks, worries about capital flight, and difficulty tracking transactions routed through offshore exchanges. Some of it is politics. And there’s an underlying tension: go too slow on regulation, and you risk pushing crypto talent and startups to friendlier jurisdictions; move too fast without safeguards, and you risk exactly the kind of instability regulators are worried about.

What to watch going forward

A few things worth keeping an eye on through 2026 and into 2027:

• The RBI’s Digital Rupee pilot keeps expanding, which may eventually shape how private crypto gets treated by comparison.
• SEBI’s proposed framework, which could put securities-like tokens under securities law rather than a crypto-specific regime.
• India joining the OECD’s cross-border crypto tax data-sharing framework, expected from April 2027.
• A possible revival of crypto-specific legislation, though nobody’s putting a firm date on it yet.

Bottom line

India’s crypto policy has been shaped by litigation and taxation, not deliberate lawmaking. That leaves investors and businesses in a strange spot: technically permitted, structurally uncertain. Until Parliament actually acts, expect the rules of the road to keep being written one court order and one budget speech at a time.






Author by,
RVR Attorneys Associates