The Reserve Bank of India has placed offshore crypto-linked payment cards under intense surveillance after detecting residents using foreign digital wallets for everyday domestic shopping. Regulators suspect these foreign wallet services bypass capital control rules and tax reporting requirements.
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How today’s news fits into the bigger picture
April 2018
RBI Restricts Bank Rails
The RBI issued a landmark circular barring regulated entities from providing banking services to cryptocurrency businesses, cutting off fiat liquidity.
March 2020
Supreme Court Lifts Ban
India's Supreme Court set aside the RBI's 2018 circular, restoring access to commercial banking channels for crypto platforms.
February 2022
Crypto Tax Framework Introduced
The Union Budget established a 30% tax on crypto gains and a 1% TDS on transactions, driving volume toward offshore platforms.
Today
RBI places offshore crypto-backed payment cards under surveillance for bypassing forex and tax laws.
What happens next?
Central bank expected to mandate strict BIN-blocking rules for non-compliant foreign card processors by early 2027.
The Reserve Bank of India (RBI) has flagged foreign crypto payment cards as potential loopholes in the country's foreign exchange architecture. Several offshore platforms allow users to store cryptocurrencies or dollar-pegged stablecoins in foreign wallets and convert them instantly to rupees at point-of-sale terminals or online checkout pages in India. While users enjoy seamless transactions, central bankers are concerned about unchecked capital outflows and tax evasion. Under the Foreign Exchange Management Act (FEMA), Indian residents are subject to strict limits on sending money abroad and holding foreign assets. Offshore crypto cards effectively allow domestic spending powered by un-declared offshore accounts. The central bank is collaborating with payment gateways and commercial banks to trace settlement flows linked to these international card processors. Regulators plan to issue updated advisories to ensure all retail payment instruments operating inside the country comply with domestic tax deduction and currency controls.
💭 If you're wondering…
International crypto cards process transactions through global card networks that convert crypto balances into local fiat currency before sending the payment to domestic merchant terminals.
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