The RBI's "crypto ban" was a circular dated 6 April 2018. It did not ban Bitcoin. It told the banks and other entities the RBI regulates not to deal in virtual currencies, and not to provide services to anyone dealing in or settling them, and it gave those already serving such businesses three months to exit. In practice it cut crypto exchanges off from Indian banking.
It no longer applies. On 4 March 2020 the Supreme Court set the circular aside as disproportionate. On 31 May 2021 the RBI itself told banks that references to the 2018 circular were "not in order" because it had been set aside, while reminding them that normal KYC, anti-money-laundering, PMLA and FEMA checks continue. So the RBI's 2018 crypto ban is gone; the ordinary rules of banking are not.
The circular's two key lines
The circular was titled "Prohibition on dealing in Virtual Currencies (VCs)", reference RBI/2017-18/154, DBR.No.BP.BC.104/08.13.102/2017-18.
Its operative part did two things:
- Entities regulated by the RBI "shall not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs."
- Regulated entities already providing such services "shall exit the relationship within three months."
Read those carefully and you see what the circular was, and was not. It was not a law passed by Parliament. It did not make owning Bitcoin a crime. It was an instruction from the banking regulator to the banks it regulates. But for any business that needed a bank account to move rupees, that was enough.
Before the circular, there was no legislative ban on virtual currencies in India. Since 2013 the RBI had issued cautionary press notes warning the public about them.
Three months to exit
I was a co-founder of Unocoin when the circular landed, and I can tell you what "three months" meant from the inside.
A crypto exchange in India runs on bank accounts. Customers send rupees in by bank transfer to buy Bitcoin. They take rupees out by bank transfer when they sell. Salaries, rent and vendors are paid from a bank account. Take the bank away and the business cannot breathe.
Three months was a countdown. We spent it working out how to keep customers' money safe, how to let people withdraw, and how to keep the company alive at all. In the end we had to lay off around a hundred people just to survive. There were tears everywhere. People who had built the company with us walked out of the office for the last time.
We made a choice then that defined the company. We did not leave India and we did not look for a way around the rules. You can't run from the government. You have to deal with them. So we went to court.
What happened to exchanges
The effect on the industry was severe. Rupee on-ramps closed. Some companies shut down or moved out of India. Those that stayed operated with very little.
Unocoin stayed open through it, and was part of the case that challenged the circular. If you want the long story, from the meetups that started it all to the courtroom, it is on our Supreme Court page.
Struck down in 2020
The challenge reached the Supreme Court as Internet and Mobile Association of India v. Reserve Bank of India, Writ Petitions (Civil) No. 528 of 2018 and No. 373 of 2018. The second petition was filed by crypto exchange operators, shareholders, founders and traders. A three-judge bench heard it, and Justice V. Ramasubramanian delivered the judgment on 4 March 2020.
The Court made two findings that matter:
- The RBI does have the power to regulate in this area. The Court did not say the RBI was powerless.
- This circular was disproportionate. None of the RBI's regulated entities had suffered a loss from dealing with virtual currency exchanges, and less intrusive options were available. So it was set aside.
The judgment did not make crypto official money in India and did not create a regulatory framework. It removed one measure. That distinction still matters when people tell you Bitcoin is "approved" in India. It is not approved. It is not banned. It is taxed, and platforms must register with FIU-IND.
The 2021 RBI clarification
A year after the judgment, some banks were still citing the 2018 circular when customers moved money to crypto platforms. On 31 May 2021 the RBI issued a circular titled "Customer Due Diligence for transactions in Virtual Currencies" (RBI/2021-22/45).
It told banks that referring to the 2018 circular was "not in order", because the Supreme Court had set it aside, and that they could not cite it. In the same breath, it reminded them to keep carrying out customer due diligence under the rules that govern all bank accounts: KYC, anti-money-laundering and terrorist-financing standards, the PMLA, and FEMA for anything that crosses borders.
Why banks still do KYC
This is the part people misread. "The ban is gone" does not mean "banks can't ask questions".
Banks in India must know their customers and watch for money laundering on every account. That applies to crypto-related transfers like anything else. A bank may ask about a large or unusual transfer. That is not the 2018 circular coming back. It is the ordinary rulebook every bank follows.
The crypto platforms have their own rulebook now. Since 7 March 2023, VDA businesses that exchange, transfer or safeguard assets for others are reporting entities under the PMLA, and must register with FIU-IND, verify customers and report suspicious transactions. Unocoin is registered with FIU-IND as a reporting entity under the PMLA. KYC on Unocoin is done inside the Unocoin app or site, with PAN verification and Aadhaar authentication.
And the debate is not over. In July 2026, the RBI told Parliament's Standing Committee on Finance that VDAs should not be legalised and that a regulatory framework would create a "false perception of safety". That is a policy view presented to a committee, not a circular. Today's rules are still the tax rules and the PMLA.
The timeline at a glance
- From 2013: the RBI issues cautionary press notes about virtual currencies. No law bans them.
- 6 April 2018: circular RBI/2017-18/154 tells regulated entities not to deal in virtual currencies or serve those who do, with three months to exit.
- 4 March 2020: the Supreme Court sets the circular aside in Internet and Mobile Association of India v. RBI.
- 31 May 2021: the RBI tells banks the 2018 circular cannot be cited, and that KYC, AML, PMLA and FEMA checks continue.
- 7 March 2023: VDA businesses are brought under the PMLA and must register with FIU-IND.
- July 2026: the RBI tells the Finance committee that VDAs should not be legalised.
Three myths about the RBI ban
"The RBI made owning Bitcoin illegal." It did not. The circular addressed what banks and other regulated entities could do. It never made holding Bitcoin a crime.
"The Supreme Court legalised crypto." Not in the sense people mean. It set aside one disproportionate measure and confirmed the RBI's power to regulate. Crypto in India is not banned, it is taxed, and it remains unregulated as an asset.
"Banks can no longer ask about crypto." They can, and must, under their KYC and anti-money-laundering duties. They just cannot rely on the 2018 circular to cut people off.
For the full story of how a small Bangalore company ended up part of that case, read our Supreme Court page. For the basics of Bitcoin itself, start on the Learn page.
Common questions
What was the RBI circular on crypto in 2018?
RBI circular RBI/2017-18/154, dated 6 April 2018, told RBI-regulated entities not to deal in virtual currencies or provide services to anyone dealing in or settling them, and to exit existing relationships within three months.
Is the RBI crypto ban still valid?
No. The Supreme Court set the circular aside on 4 March 2020 in Internet and Mobile Association of India v. RBI, and the RBI told banks on 31 May 2021 that it could no longer be cited.
Can banks refuse crypto transactions?
Banks cannot rely on the 2018 circular, but they must still carry out KYC, anti-money-laundering, PMLA and FEMA checks on every account, which can include questions about crypto-related transfers.
What did RBI say in 2021 about crypto?
In circular RBI/2021-22/45 of 31 May 2021, the RBI said references to the 2018 circular were not in order because it had been set aside, and that banks should continue customer due diligence under existing rules.