Investors who consider starting a company in India in the field of cryptocurrency should take into consideration that the country recognizes only blockchain activities. If you want to establish a Virtual Asset Service Provider (VASP) in India, you can rely on our local consultants.
Our team of specialists in company formation in India can advise on this matter. We are also at the service of investors who want to apply for a crypto license in India.
Table of Contents
Current view of cryptocurrencies in India
Although the Indian government has expressed its view on cryptocurrencies, which are not seen as legal tender on the country’s territory, it does not mean that such activities are illegal. At the moment, there are no specific regulations addressing this new sector.
Holding assets such as Bitcoin and other similar virtual currencies is not prohibited in India. Still, it is necessary to know that virtual currencies can’t be used as a payment system in India, but the local authorities are highly interested in sustaining blockchain activities.
Blockchain is seen as a trustworthy mechanism, due to the fact that all the parties involved can have free access to an updated transaction. Indian representatives consider blockchain technology can be the most suitable option for starting a digital economy. Our team of consultants in company registration in India can offer further assistance on the main advantages of investing in blockchain technologies.
Opening a cryptocurrency business can start with the purchase of a virtual office in India to use as a legal address.
Are there special conditions to open a cryptocurrency company in India?
Until the draft law is passed, there are no special conditions to respect in order to start a cryptocurrency business in India. No matter if you are a local or foreign entrepreneur, you must first comply with the 2013 Companies Law. Apart from this, in light of paying the taxes applied to VDAs, you must also complete several formalities, among which:
- obtain a Permanent Account Number (PAN);
- apply for a Tax Deduction and Collection Account Number (TAN);
- obtain a Goods and Services Identification Account Number (GSTIN).
Apart from these, applying for a crypto license in India may become mandatory for certain activities, such as the issuance and trading of various VDAs.
If you want to know more about how to form a company in India, feel free to address our local consultants.
What is currently known about the crypto license in India
The latest data on cryptocurrency companies in India was made available in March 2022, however, up to that date, there are no specific requirements related to obtaining a cryptocurrency license. Even so, with so many regulations in place, it is expected for platforms to be required to apply for such licenses in the future.
For updated information, you can always get in touch with our agents.
Crypto regulations in India
The Cryptocurrency and Regulation of Official Digital Currency Bill provides the legal framework for the creation of an official virtual token that will be issued by the Reserve Bank of India and the Securities and Exchange Board. Such companies must also respect anti-money laundering laws and regulations for combating financial terrorism.
Moreover, it is highly possible for companies to be able to apply for cryptocurrency exchange licenses in India. The law has not been passed yet, however, it is expected to. Until then, on February 1st of 2022, the government acknowledged cryptocurrencies as Virtual Digital Assets (VDA) and also provided specific provisions related to their taxation.
A new law providing for the issuance of a VASP license in India is expected starting 2025 onwards.
If you decide to open a cryptocurrency company and apply for a crypto license in India at this point, our company formation consultant will help you.
Requirements for crypto exchanges in India
After obtaining a crypto license in India, it is possible to set up virtual money exchanges, however, these will be required to disclose information about their profits and losses, the amounts held in cryptocurrencies, as well as the deposits made by clients. Apart from these, all Indian crypto exchanges must draft Know-Your-Client policies and keep information on the traders and customers operating on their platforms.
Feel free to address our company registration advisors for more information on the requirements cryptocurrency exchanges must comply with in India.
Registration of crypto companies with the Finance Intelligence Unit-India
Until a specific law covering special requirements to open a crypto company in India is released, the Ministry of Finance announced that Virtual Asset Service Providers must register with the Financial Intelligence Unit-India (FIU-IND). For this purpose, such companies will need to comply with certain laws and regulations, among which:
- the Prevention of Money Laundering Act;
- the Anti-Money Laundering Rules;
- the Combating the Financing of Terrorism Guidelines.
According to FIU-IND, VASP license holders must maintain records of their transactions. They must also comply with reporting standards and file various documents with the relevant authorities.
Our Indian company formation agents can provide information on the latest developments with respect to establishing a crypto business.
Documents required for registration with FIU-IND
If you want to open a crypto company in India, you can do so as an individual, by setting up a partnership, or by incorporating a legal entity. This information is important in the context of registration of FIU-IND, as the documents to file with it depend on the legal nature of the applicant.
Individuals applying for VASP licenses in India must submit the following papers:
- a recent photo;
- his/her identification papers;
- information about his/her official address in India;
- other documents attesting to the financial status of the applicant.
Partnerships seeking to obtain crypto licenses in India must file:
- the partnership agreement;
- the registration certificate;
- the document/decision of the appointment of the person representing the partnership in its transactions;
- the power of attorney for the respective person.
Companies seeking to operate as Virtual Asset Service Providers in India must submit the following papers:
- the constitutive documents and certificate of registration;
- details of the company managers and/or employees allowed to transact on behalf of the company;
- the decision and power of attorney issued by the management board to the appointed persons.
If you want to apply for a crypto license, our company registration consultants in India can assist.
Taxation of cryptocurrencies in India
The following have already been established in relation to the taxation of cryptocurrency:
- 30% tax on profits made from selling, trading or spending digital money;
- the sale of crypto assets valued above INR 50,000 (around USD 600) is imposed with a tax of 1% deductible at source;
- in some cases, the 1% TDS may apply for a minimum value of INR 10,000.
Businessmen can address our team of consultants for in-depth assistance related to this subject.