On 17 June 2026, the Enforcement Directorate's Bengaluru office searched premises linked to five crypto payment entities under the Foreign Exchange Management Act (FEMA). The ED alleged that VDAs were used for unauthorised cross-border transfers of money, and said none of the entities had RBI authorisation for such transfers. Accounts holding about ₹6 crore were restrained. These are allegations made during an investigation, not findings by a court.
The searches were about moving money across India's borders, not about owning Bitcoin. Buying, holding and selling Bitcoin in India is not banned. It is taxed and unregulated as an asset, and platforms must register with FIU-IND. Sending money abroad is a separate question governed by FEMA and the RBI's Liberalised Remittance Scheme, and using crypto does not take you outside those rules. If you remember one thing from this post, make it that.
What the ED did in June 2026
According to reports, the ED's Bengaluru zonal office carried out searches at premises linked to five entities in the crypto payments space on 17 June 2026. The action was under FEMA, the law that governs foreign exchange and cross-border payments. The ED's allegation was that these businesses facilitated cross-border transfers using VDAs without the RBI authorisation such transfers need. It restrained bank accounts holding about ₹6 crore.
I am deliberately not naming the companies. The case is an investigation. No court has ruled. Naming businesses alongside an allegation, in an explainer for ordinary users, does nothing for you and could be unfair to them. What matters for you is the principle.
FEMA in plain words
FEMA, the Foreign Exchange Management Act, is the law that controls how money moves between India and the rest of the world. It covers who can deal in foreign exchange, what kinds of cross-border payments are allowed, and on what terms. The RBI administers much of it, and the ED enforces it.
The core idea is simple. Moving value out of India, or into India, goes through authorised channels and follows set rules. That applies whatever form the value takes. If something is effectively being used to send money abroad, the question under FEMA is whether it was done through a permitted route.
LRS: the legal way to send money abroad
For individuals, the main permitted route is the RBI's Liberalised Remittance Scheme (LRS). It lets resident individuals send money abroad, within an annual limit and for permitted purposes, through an authorised bank. Your bank handles the paperwork and tells you what applies to your remittance.
Check the current limit and rules with your bank, because they are set by the RBI and can change. The important point is that the route exists, it is transparent, and it is the way to do it.
What I will never do on this site is suggest a way around LRS. Using crypto to move money abroad outside these rules is not a loophole. It is the exact thing the ED was investigating.
Why holding Bitcoin is a different question
This is where people get confused, so let me lay it out.
- Owning Bitcoin in India. Not banned. In 2018 the RBI told banks to stop serving crypto businesses, and the Supreme Court set that circular aside on 4 March 2020. Since then, the Finance Act 2022 brought the 30% tax on VDA gains and 1% TDS, and since March 2023 platforms must register with FIU-IND under the PMLA.
- Buying and selling Bitcoin in rupees on a registered Indian platform. A domestic activity. KYC, TDS and tax reporting apply. Gains are taxed at 30% under section 115BBH plus surcharge and cess. Check your case with a CA.
- Using crypto to move money across the border. A FEMA question. The form of the asset does not change the rules on cross-border payments.
The ED's searches touched the third category only. They did not change anything about the first two.
FIU-IND has made a similar point from the anti-money-laundering side: PMLA obligations are activity-based and do not depend on where a business is located. The law looks at what you do, not what you call it or where your servers sit. FEMA works the same way.
Why this does not surprise me
When we started Unocoin in 2013, our philosophy was that you cannot run from the government. They exist and you have to deal with them. Never break the rules. Never be offside.
That rule applies to cross-border money more than anywhere else. I have seen many clever ideas about using Bitcoin to move money between countries. Some of them are good ideas in the abstract. But in India, cross-border money has its own rules, and those rules apply no matter what technology carries the value. The people who build lasting businesses here are the ones who respect that, and so are the users who never get a knock on the door.
What this means for users
- Holding Bitcoin on a registered platform, or in your own wallet in India, is not what these searches were about.
- If you want to send money abroad, use your bank and the LRS. Do not use crypto services or agents offering to move money across borders for you.
- Be wary of anyone offering crypto-based remittance with no paperwork. If it skips KYC and skips your bank, it is exactly what FEMA exists to stop.
- Use platforms registered with FIU-IND, and do KYC only inside the official app or website. Never share your OTP, password, PAN or seed phrase with anyone who contacts you.
- Keep your records and report your VDA income in Schedule VDA. The tax guide covers how.
What to watch
The ED's investigation will take its course, and allegations may or may not be proven. In the meantime, the wider rules are moving toward more transparency, not less. From calendar year 2026, exchanges report transactions in more detail under the Crypto-Asset Reporting Framework, including transfers to external wallets. A Parliament committee recommended in July 2026 that India build a regulatory framework for VDAs. None of that changes the basic answer: hold within the rules, move money abroad through the rules.
A note for families who send money across borders
Many Indian families have someone abroad: a student, a parent visiting a child, a relative supporting someone at home. I understand why a fast crypto transfer sounds attractive compared with a bank form and a wait. But the bank route exists for a reason, and it protects you. If someone offers to "settle" your remittance through crypto with no paperwork, say no. If the transfer is ever questioned, you want a bank record showing you used the permitted route, not a chat history with an agent.
And if anyone pressures you over the phone about a cross-border payment and asks for OTPs, passwords or your PAN, hang up. If you lose money to a scam, call 1930 or file at cybercrime.gov.in as fast as you can.
For the background on how India's courts and regulators got here, read the Supreme Court story. If you are new to Bitcoin, start with the learning page. And to get developments like this explained in plain words every week, sign up for the India Bitcoin Brief.
Common questions
Is sending crypto abroad legal in India?
Moving money across India's borders is governed by FEMA and, for individuals, the RBI's Liberalised Remittance Scheme through an authorised bank. Using crypto does not take a transfer outside those rules. Use your bank and the LRS to send money abroad.
What is FEMA?
The Foreign Exchange Management Act is the law governing foreign exchange and cross-border payments in India. The RBI administers much of it and the Enforcement Directorate enforces it.
Was crypto banned after the ED raids?
No. The June 2026 searches were about alleged unauthorised cross-border transfers under FEMA. Buying, holding and selling Bitcoin in India is not banned; it is taxed, unregulated as an asset, and platforms must register with FIU-IND.
Can I use crypto for remittance?
Do not use crypto to send money abroad outside the LRS. Cross-border transfers need authorised channels under FEMA, and in June 2026 the ED alleged that entities without RBI authorisation facilitated such transfers using VDAs.