No Regulatory Ban on Offshore Crypto Platforms: FIU-IND Registers VASPs Under PMLA while RBI Issues Warnings on Risks to Public

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Amid rising concerns over the operation of offshore cryptocurrency platforms within India, the Ministry of Finance has clarified that there is currently no regulatory ban on such platforms. In a written reply to Unstarred Question No. 15 in the Lok Sabha on July 21, 2025, Minister of State for Finance Pankaj Chaudhary stated that since crypto assets are not regulated in India, the question of determining the legality or illegality of individual offshore platforms does not arise.

However, to bring a level of supervision to the sector, the Financial Intelligence Unit – India (FIU-IND) has been actively registering Virtual Asset Service Providers (VASPs) under the Prevention of Money Laundering Act (PMLA). This framework applies uniformly to both domestic and foreign platforms, provided they cater to Indian users. Platforms that fail to register with FIU-IND are tracked on a dynamic list maintained by the authority, although the government has not released a public list of such non-compliant entities.

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The government has not conducted a formal study or published an exhaustive list of illegal offshore cryptocurrency platforms, their countries of origin, or total valuations over the last five years. Instead, its focus has been on compliance enforcement through financial intelligence measures and taxation policies.

As part of the fiscal framework, the Finance Act, 2022, introduced Section 194S of the Income Tax Act, 1961, which mandates a 1% Tax Deducted at Source (TDS) on all Virtual Digital Asset (VDA) transactions, including those involving offshore platforms, if the income is taxable in India. This mechanism ensures that tax obligations are fulfilled regardless of the geographical location of the service provider.

In parallel, the Reserve Bank of India (RBI) has continued to issue advisories to caution users, holders, and traders about the associated risks of dealing with cryptocurrencies. These advisories have highlighted a range of risks—including economic, financial, legal, operational, and security concerns—but have not named specific platforms. The RBI’s communications have been sector-wide in nature, reinforcing its longstanding concerns about the stability and consumer protection issues tied to the crypto ecosystem.

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As of now, no awareness campaign specifically targeting the dangers of using offshore or unregulated platforms has been reported by the Ministry, although the RBI advisories serve as indirect guidance.