India: No Licence, No Ban — and a Live Threat to Prohibit

India has no crypto ATM licence at all — just a light AML registration and a punishing tax regime — but the one time a Bitcoin ATM was actually installed, in 2018, police seized it within a week, and the country's central bank is now pushing to ban private crypto outright.

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119M Estimated crypto users — #1 in Chainalysis's Global Adoption Index, 3 years running

0 Dedicated licence category for crypto businesses — none exists

49%+ Combined tax burden for top earners (30% tax + 4% cess + 1% TDS + 18% GST on fees)

India is, by user count, the single largest crypto market General Bytes could enter — and one of the least defined. There is no licensing regime for crypto businesses of any kind; the only requirement is registration with the Financial Intelligence Unit-India (FIU-IND) as a "Reporting Entity" for anti-money-laundering purposes, alongside a punishing tax regime.¹ A trade publication summed up the situation precisely in August 2026: India runs "under a tax code that treats it as legal and a policy vacuum that treats it as unrecognised."² Compounding the uncertainty, the Reserve Bank of India (RBI) formally told a parliamentary committee in July 2026 that it backs prohibiting private cryptocurrency altogether — not yet law, but a live and unresolved threat from the country's most powerful financial regulator.³ As with the rest of our legislation map, any obligation here would fall on the in-country machine operator, not on General Bytes as hardware and software vendor.

Last updated: September 2026

A Regulatory Vacuum, Tested Once Against a Physical Kiosk

India's approach has been to tax and monitor crypto rather than license or ban it. Following the Supreme Court's March 2020 ruling that struck down the RBI's 2018 circular barring banks from serving crypto businesses, trading has continued on FIU-IND-registered platforms — 54 Virtual Digital Asset Service Providers were registered as of mid-2026, per an official parliamentary reply.⁴ But "registered" is not "licensed": there is no capital requirement, no fit-and-proper test, and no dedicated regulator the way Thailand or Brazil have one — crypto simply sits outside India's statutory financial-regulation perimeter.²

A physical kiosk has already been tested against this ambiguity, with a genuinely mixed outcome. In October 2018, Unocoin installed India's first Bitcoin ATM at a Bengaluru mall; within a week, Central Crime Branch cyber police seized the machine and arrested a co-founder, stating it "had not taken any permission from the state government and is dealing in cryptocurrency outside the remit of the law."⁵ The case dragged on for more than two years. In February 2021 the Karnataka High Court quashed the FIR entirely, accepting Unocoin's argument that the kiosk was not a bank-linked ATM but a cash deposit/withdrawal device functioning more like a telecom payment kiosk, and rejecting the police's theory that it violated RBI rules.⁶ Read together, the precedent cuts both ways: a machine can be shut down and its operator arrested on a local police officer's own initiative, but the eventual legal ruling favoured the operator's characterisation of the business, not the state's. Neither the seizure nor the acquittal has been repeated since, and no crypto ATM is known to operate in India today.

Tax and AML: Heavy, Not Absent

Every crypto disposal is taxed at a flat 30% rate plus a 4% health-and-education cess, with a 1% tax deducted at source (TDS) on transfers above the applicable threshold, and 18% GST on platform fees — a combined burden exceeding 49% for top earners, and losses cannot be offset against gains or carried forward.⁷ FIU-IND registration requires identity verification, transaction record-keeping and suspicious-activity reporting under the Prevention of Money Laundering Act; the tax authority separately reports having identified ₹888.82 crore in undisclosed virtual-digital-asset income and issued over 44,000 taxpayer notices, evidence that enforcement is active even without a licensing regime.³

Banking, Hardware Import and the Live Ban Threat

Banks may formally service FIU-IND-registered platforms with enhanced due diligence, but informal caution persists even after the Supreme Court's 2020 ruling — the RBI's public preference remains for banks to keep their distance from crypto rather than embrace it.⁸ On hardware, India and the EU concluded free-trade agreement negotiations on 27 January 2026, but the deal was not yet ratified or in force as of this writing, so standard duties still apply: most electronics categories carry low or 0% Basic Customs Duty, with an 18% IGST charged on the CIF import value as the main cost — the exact HS 8472 rate should be confirmed with a customs broker.⁹

The overhanging risk is regulatory, not commercial. In July 2026 the RBI told the Parliamentary Standing Committee on Finance it favours a "containment" strategy — walling crypto off from the banking system as a step toward prohibition — while a separate committee report the same month recommended the opposite: phased regulation via industry self-regulatory organisations under SEBI or RBI oversight.^3,10 Neither position has become law, and a scheduled 27 August 2026 hearing on the matter was cancelled with no new date set, extending a policy paper delay that has now run since May 2025.²

The Next 12–24 Months

India is a genuine outlier on our map: the single biggest user base of any market we cover, and the least legally defined. There is no licence to obtain — which cuts two ways. It means no capital threshold or lengthy application process stands between an operator and the market, but it also means there is no regulatory shelter if enforcement turns against a specific device, as it briefly did in 2018. The RBI's July 2026 ban proposal and the parliamentary committee's competing regulation-first recommendation are on a collision course that should resolve, one way or another, within the next year or two.^3,10 Given the 2018 precedent, the realistic approach for GENERAL BYTES is to treat India as a market to watch closely rather than enter now — and if entering, to secure local counsel's assessment of state-level permission requirements before installing a single machine, not after.

Sources and references:

1. FIU-IND Reporting Entity registration in lieu of a licensing regime — theblockverse.co
2. "Tax code that treats it as legal and a policy vacuum that treats it as unrecognised"; 27 August 2026 hearing cancelled, no new date; policy paper delayed since May 2025 — cryptotimes.io
3. RBI backs prohibition/containment strategy, July 2026; ₹888.82 crore undisclosed VDA income; 44,000+ taxpayer notices; $340bn OECD transaction-volume estimate — cryptotimes.io
4. 54 VDASPs registered with FIU-IND as of mid-2026, per official Parliament reply — cryptowire.in
5. Unocoin Bitcoin ATM seized by CCB cyber police, 24 October 2018, co-founder arrested — thenewsminute.com
6. Karnataka High Court quashes FIR against Unocoin, 8 February 2021 — thenewsminute.com
7. 30% flat tax + 4% cess, 1% TDS, 18% GST on fees, no loss offset/carry-forward — cryptotimes.io
8. Banks permitted to serve registered platforms under due diligence, but RBI preference for distance persists post-2020 ruling — sansalegal.com
9. EU–India FTA negotiations concluded 27 January 2026, not yet in force; Basic Customs Duty and 18% IGST structure — mfa.gov.lv, iwishbag.com
10. Parliamentary Standing Committee on Finance recommends phased regulation via SROs under SEBI/RBI, rejecting RBI's containment approach; 119 million users, $340bn OECD volume estimate — cryptotimes.io

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Legal Disclaimer: This article by GENERAL BYTES is for informational purposes only and does not constitute formal legal, financial, or investment advice. India has no dedicated licensing regime for crypto businesses and the RBI has an active, unresolved proposal to prohibit private cryptocurrency; always consult specialised Indian legal counsel, including on state-level permission requirements, before considering market entry.