Reserve Bank of India regulations on Bitcoin in India



Laws about Bitcoin are in a gray area today across the world. I studied documents from the Reserve Bank of India’s public repository surrounding Virtual currencies and prepaid solutions. I happened to study two documents about Prepaid Payment and Foreign Exchange Management Rules, 2000.

Why research Prepaid Payment rules?

A person may come across the need to purchase them through Fiat Currencies (INR, USD, GBP, etc). Purchasing any e-currency and loading to an eWallet is regulated by the RBI. Although Bitcoin is in no way related to this, I wanted to see how close I could get to any laws that could present a roadblock.

Is Bitcoin Regulated in India?

The RBI regulation on Prepaid Payment Instruments in India defines a lot of areas. After understanding the documents of RBI’s guidelines and Rules, this is where I could find the only roadblock based on regulation.

3. Eligibility

3.2 Only banks which have been permitted to provide Mobile Banking Transactions by the Reserve Bank of India shall be permitted to launch mobile based prepaid payment instruments (mobile wallets & mobile accounts).”


In order to enter into the market; fiat is needed to purchase Bitcoin. Fiat will fade away as more people adopt Bitcoin. Until that frictionless free flow between consumers and merchants is made possible, this is a problem area for Bitcoins entry into India.

It can be overcome through:

  • Donations and sponsorships. There are enough Smartphones to cause this market to explode in any sponsor’s favor.
  • Sell Services and goods for Bitcoin. Programming Skills, etc.
  • Mining is too expensive at this stage, unless you have the latest and best equipment. Electricity is not expensive in India.

If we keep fiat out of the system, then Bitcoin is unregulated in India.

I spent some time on the Foreign Exchange Management Act, but it is entirely out of the scope of Bitcoin. As it is a decentralized currency, it can be considered to be a domestic currency since it is being mined in India. This leaves it out of the scope of Foreign Exchange.

Even if, IP’s can be tracked when Bitcoin is used for Foreign Exchange, they can be easily anonymized through the Tor Wallet. Since it is a true P2P (Peer to Peer/ Person to Person) currency, it is impossible to regulate in a population using Bitcoin as a token of value to trade. The logistics to monitor a mass population is not feasable.

Please do read the Draft Guidelines for issuance and operation of Prepaid Payment Instruments in India and Foreign Exchange Management (Current Account Transactions) Rules, 2000. They will help to understand more about the Banking Regulations in India and help solve some problems. India’s closed currency banking system is rival to none. The banks have maintained a lot of public faith in urban areas and have reached a lot of people in this 1.5B population landscape.

India has an unbanked population of 41% according to RBI statistics

(Source: URL Below).

I would like to reach out to the world of regulators and lawmakers to release a statement on Bitcoin. Can the Reserve Bank of India issue a statement on Bitcoin?

Please forward this till someone takes notice and moves Bitcoin along in a positive path.


Draft Guidelines for issuance and operation of Prepaid Payment Instruments in India

Foreign Exchange Management (Current Account Transactions) Rules, 2000.

Tor Wallet

Ignoring the Unbanked: Reserve Bank of India’s Mobile Payments Guidelines – A study by Radix Consultancy


51 comments on “Reserve Bank of India regulations on Bitcoin in India

  1. Pingback: Basics of Bitcoin » FinHow

  2. hi..
    I am from delhi, india
    i was considering setting up a token solution wherein a token bought throught fiat currency could be used to do transactions…very much like the recharge coupons work for mibile phones..Do the RBI rules apply to this case??

  3. BTC is of the people, by the people, and for the people. The central banks and governments of the world have all proven themselves to be corrupt criminals, good-for-nothing parasites who do not represent the people anymore than blood-sucking parasites represent their hosts. Who cares what RBI thinks? It is time to wholesale fire all government parasites and replace them all with a true P2P socialist democracy! BTC has proven that a single good open-source P2P program can replace vast massive dinosaur institutions of the central banks (and their wars, environmental destruction, etc). Now we should replace all aspects of centralised government and return the power to the people, now that the technology has finally made it possible!

    Vive la Revolution!

  4. Am in being a net savy and CSE ug when a came across BTC few months back the and following its foreign exchange market. Can’t we convert BTC into INR via other foreign exchange services like E-currency service etc??

  5. Are there services that convert BTC to foreign currency say USD and then covert it back to INR. Yea, i agree there is a transaction cost, but would this be under the regulations.

  6. Hi, Thanks for your article which solves my few doubts but i would like to know how much amount that can be allowed to exchange without permission under Law. Finally does these FEMA, SEBI, RBI …. will only appicable for common man??

  7. Hi Benson

    I have a mining setup, now there is a scenario for me to get my mined money into my bank account.
    I.E. I trade at BTC-e and withdraw my $ to my indian PAYPAL account. which automatically withdraws to my bank accout.
    Paypal withdraws auto to indian banks, you already know that.
    Is this scenario Possibile to work with ?

    • This is possible, but would need some custom scripts to be written. The custom script will do the exchange and transfer funds appropriately. Do check on forex regulations though as this may come into play when moving BTC out of India.

  8. Hi i want to buy bitcoin but i am Indian . Am i allowed to buy bitcoin ? i dont want to convert them into INR. I just want to use them to buy online things AM i allowed to do that ?

  9. An Indian is allowed to operate one foreign account (provided you declare it), open an account in a foreign country, convert btc into that account (in that country’s currency) & transfer to India whenever and whatever amount you need. Provided you pay taxes on all income there shouldnt be a problem, correct?

  10. I blog often and I truly thank you for your information.

    This great article has really peaked my interest.
    I’m going to bookmark your blog and keep checking for new details about once a week.
    I subscribed to your Feed as well.

  11. Pingback: India Buy Bitcoin | Manage Bitcoin

  12. hello Samuel
    I am a Law student and i am doing a research paper which talks about authentication of bitcoin in India and to give it equal stayhold as other monetary instruments and this paper will be published at a large scale…it will be highly appreciated if u share ur knowledge with us as it will help me to draw more lines.

  13. Pingback: Ewallet Bitcoin | Bitcoin Success

  14. Pingback: Bitcoin India Rbi | Bitcoin Success

  15. Bitcoin mining is legal in India right? I am about to setup a Mining farm in India by using commercial electricity. It won’t create any problems right? Because according to wikipedia, BTC is restricted in India. Please advice.

    • Hi Arun,

      Bitcoin is legal in India. There has been no regulatory involvement with Bitcoin in India thus far. The wikipedia post is wrong. There are several evident mistakes in that post as well.

  16. Hi Samuel,

    How to Purchase Bitcon in India?
    How to transfer from my account to bitcoin viceversa? and any charges for this ?
    How it work ?
    Can you suggest me with some url’s.
    How secured is the Bitcoin?

    Thanks in advance.

  17. hi samuel i have some bitcoins on my e-wallet so i want to convert them to inr.. how can i do that from paypal or with an exchange site like btcxindia please help me /. thanks

  18. how is/how can bitcoin mining be done in India?
    any regulations on it?
    how can I enter into bitcoin exchange?

  19. where and how to open bitcoin wallet in India?can i use bitcoin to purchase from Europe online through this wallet?

  20. How can we make Purchases and Sales on Bitcoin Core.. Does it gets integrated with any bank account?? Does it supports bank integration in India?
    I just created a wallet on Coinbase and realized that it does not support buy/sell in India…

    Also, what is the difference between a Wallet and a Vault ??

    • Try for an Indian Provider with an ability to buy and sell here.
      A wallet, normally stores funds in an easy to access manner to buy and sell everyday. Vaults are mainly cold storage solutions that may take few days to withdraw from.

  21. My son Nenadd would like to enter in Bitcoin mining activities. He is studying right now. Can he get complete guidance for starting this new venture ? secondly what technical, commercial or other legal requirments he has to follow. May be he will generate Bitcoins for our charitable trust which is dedicated for Music. Is there any RBI approval/permission/ FCRA required for this venture ?

    • While most of BItcoin is in the grey area, Bitcoin mining is merely the usage of computing equipment to calculate. This is definitely not illegal. But do consult a tax consultant on any other charges to be paid. FCRA does come in when there is foreign funds and a trust. So if the coins were mined and from India, it should not be considered under FCRA.

  22. Hello i am Aman Kumar Gupta.
    I have some Online bitcoin & want to sale In INR. so plz suggest me how it is possible to Transferred in My Indian Bank Account.

    Thanking You

  23. Hi

    So, Iwant to trade bitcoin with platforms like BITFINEX which are outside India. I’ve read what you mentioned but never found any laws regarding it. So should I assume that it’s legal as of now? Ive mailed those guys and they said they have few Indians as customers too. So what’s your advice?

    • Hi,
      I have heard of some users trying out of India Exchanges. They do face severe delays and problems in withdrawals of Fiat that can take over 2 weeks. Not sure if this is still the case. Your best bet would be to use an Indian exchange like You may find legal challenges in transferring Fiat as well into out of India Exchanges.

  24. the thing is i want to buy a game online and it suppports bitcoin as payment otion my friend has a couple of bitcoin he told me to crate a bitcoin wallet and he will send it to my wallet the thing is i tried 2-3 wallet s and they all require pancard verification is there any wallet where u can just sign up and store and buy things from bitcoin i dont need the bitcoin to be converted to inr i just need it to buy stuff online

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