How Crypto Exchange Registration Works in India

India does not issue a dedicated 'crypto exchange license.' Exchanges register as reporting entities with FIU-IND under the PMLA — what that actually requires, plus the RBI banking constraint.

Updated August 2026 · Reviewed by the PipeFlare team

India has no standalone crypto exchange license — Virtual Digital Asset Service Providers register as reporting entities with the Financial Intelligence Unit-India (FIU-IND) under the Prevention of Money Laundering Act

The framework determines who can legally operate a VDA business in India, what compliance costs are involved, and why banking access — not registration itself — is usually the harder problem

About crypto exchange license in india

India does not issue a dedicated "crypto exchange license." What exists is a mandatory registration for Virtual Digital Asset Service Providers (VDA SPs) — anyone running an exchange, custody, transfer, or brokerage service in crypto — with the Financial Intelligence Unit-India (FIU-IND) as a reporting entity under the Prevention of Money Laundering Act (PMLA). The framework came into force on March 7, 2023, when the Ministry of Finance formally brought VDA activities under PMLA scope. There is no separate state-level crypto license in India — the framework is fully centralized under FIU-IND — and the practical hard problem for most operators is not registration itself but obtaining and keeping banking relationships.

How it actually works

Under the March 7, 2023 gazette notification, any person or entity that (a) exchanges VDAs for fiat, (b) exchanges one VDA for another, (c) transfers VDAs, (d) safeguards or administers VDAs, or (e) participates in and provides services related to a VDA issuer's offer or sale, is a "reporting entity" under the PMLA. Registration is done directly with FIU-IND (fiuindia.gov.in), and the entity is then subject to the same AML/CFT obligations as banks and financial institutions — appointing a Principal Officer, running KYC on customers, filing Suspicious Transaction Reports (STRs) and Cash Transaction Reports (CTRs), and maintaining records. In December 2023, FIU-IND issued show-cause notices to nine offshore exchanges — including Binance, KuCoin, Kraken, Huobi, Gate.io and others — for operating in India without registering, and their URLs were subsequently blocked. Binance re-entered the Indian market in May 2024 after registering with FIU-IND and paying a penalty of approximately INR 18.82 crore for prior non-compliance. Separately, the Union Budget 2022 introduced a flat 30% tax on income from VDA transfers and a 1% Tax Deducted at Source (TDS) on VDA transfers above statutory thresholds — this tax regime applies to users regardless of the exchange's registration status. The RBI's April 6, 2018 circular effectively barred Indian banks from providing services to crypto businesses; the Supreme Court struck down that circular on March 4, 2020 in Internet and Mobile Association of India v. Reserve Bank of India, restoring formal banking access — but many Indian banks continue to be cautious in practice, which remains the most common operational blocker for new exchanges.

Start here

1Incorporate the operating entity in India (typically a private limited company) — VDA activity in India is not a permissible activity for most foreign branches without a local vehicle.
2Register the entity with FIU-IND as a reporting entity under PMLA via the FIU-IND portal — this is the actual "license" step, and it is central, not state-level.
3Appoint a Principal Officer, implement documented KYC/AML procedures, and set up systems for STR/CTR filing and record retention as required of any PMLA reporting entity.
4Secure a banking partner willing to serve a crypto business — this is usually the hardest step in practice, since many Indian banks remain cautious despite the 2020 Supreme Court judgment restoring formal access.
5Register for and comply with the 30% VDA tax and 1% TDS obligations introduced in the Union Budget 2022 (Finance Act 2022) — these apply at the transaction level irrespective of exchange registration status.

Strengths

Framework is centralized and clear — one registration with FIU-IND covers the whole country, with no state-by-state licensing to chase.
PMLA reporting-entity status places crypto exchanges on the same AML footing as banks, which offers a clearer compliance path than the pre-2023 grey zone.
The Supreme Court's March 2020 judgment in IAMAI v. RBI legally restored bank access for crypto businesses.

Common misunderstandings

Banking access remains the real bottleneck in practice — many Indian banks still decline crypto-business accounts despite the 2020 Supreme Court ruling.
The 1% TDS on VDA transfers has been widely reported to have suppressed domestic trading volumes and pushed retail users to offshore venues.
Enforcement risk is significant — FIU-IND's December 2023 action against nine offshore exchanges showed the regulator is willing to block URLs and impose material penalties on non-compliant operators.

Common questions

Do I need a special "crypto exchange license" to operate in India?

No — India does not issue a dedicated crypto exchange license. What exists is a mandatory FIU-IND registration as a reporting entity under the Prevention of Money Laundering Act (PMLA), applicable to any Virtual Digital Asset Service Provider. The March 7, 2023 Ministry of Finance notification brought VDA activities under PMLA scope, and FIU-IND is the single national regulator for AML/CFT purposes.

What is FIU-IND and what does registering with them actually require?

FIU-IND (Financial Intelligence Unit-India) is India's central agency for receiving, processing, and disseminating information on suspicious financial transactions, and is the authority responsible for administering the PMLA. Registration is done through the FIU-IND portal (fiuindia.gov.in) and, once registered, a VDA SP has the same AML obligations as a bank: appointing a Principal Officer, running customer KYC, filing Suspicious Transaction Reports and Cash Transaction Reports, and maintaining records.

Can Indian banks legally serve crypto exchanges?

Yes — the Supreme Court struck down the RBI's April 6, 2018 circular banning banks from serving crypto businesses in its March 4, 2020 judgment in Internet and Mobile Association of India v. Reserve Bank of India. Formal legal access to the banking system was restored. In practice, though, many Indian banks continue to be cautious about onboarding crypto-business accounts, which remains one of the most common operational blockers for new exchanges.

What happened to Binance in India?

Binance was one of nine offshore exchanges that received show-cause notices from FIU-IND in December 2023 for operating in India without registering as a PMLA reporting entity, and its URL was subsequently blocked. Binance re-entered the Indian market in May 2024 after registering with FIU-IND, reportedly paying a penalty of approximately INR 18.82 crore for the earlier non-compliance period.

How is crypto taxed in India in 2026?

The Union Budget 2022 introduced a flat 30% tax on income from the transfer of virtual digital assets, with no allowance for offsetting losses against other income, plus a 1% Tax Deducted at Source (TDS) on VDA transfers above the statutory threshold. These tax rules apply to users regardless of whether the exchange they use is FIU-IND-registered, and are separate from the PMLA registration framework itself. This is general information, not tax advice — a chartered accountant familiar with Indian VDA taxation should confirm your specific situation.

Is there a state-level crypto license in India, like there is in the US?

No — unlike the US, where states such as New York (BitLicense) run their own crypto licensing regimes, India's framework is fully centralized. FIU-IND registration under the PMLA is the single applicable framework nationwide, and there is no additional state-by-state crypto license to obtain.

Sources

Ready to put this into practice?

Exchange sign-up bonuses pay both you and a referrer after a qualifying trade.

See bonuses →