RBI Steps Up Scrutiny of Crypto Cards in India as Offshore Stablecoin Payments Face Regulatory Heat
India’s cryptocurrency payment ecosystem is facing increased regulatory scrutiny after the Reserve Bank of India (RBI) and the Financial Intelligence Unit-India (FIU-IND) reportedly began examining offshore crypto cards being used by Indian residents for everyday purchases and cash withdrawals.
The development has raised concerns among cryptocurrency users who have increasingly turned to international prepaid cards to spend digital assets without first transferring funds into conventional Indian bank accounts.
According to reports published on November 2, 2026, the regulatory examination includes offshore payment services such as RedotPay, whose crypto-linked cards operate through international payment networks, including Visa and Mastercard.
These cards allow users to maintain cryptocurrency or dollar-backed stablecoin balances in designated wallets. When a customer makes a purchase, the required amount is converted into Indian rupees, allowing merchants to receive payments through conventional card infrastructure.
The technology has reportedly been used for online shopping, mobile recharges, flight bookings and even cash withdrawals through supported ATMs.
However, the growing adoption of these services has raised questions about whether offshore crypto-funded payment arrangements comply with India’s existing financial regulations.
One of the major concerns involves the Foreign Exchange Management Act (FEMA), which governs cross-border financial transactions and foreign exchange movements. Regulatory experts have also raised questions about India’s prepaid payment instrument framework and the Payment and Settlement Systems Act.
Another significant concern is customer verification and financial transparency. Some offshore crypto card programmes reportedly advertise limited identity verification requirements, potentially creating difficulties for authorities attempting to identify the original source of funds and monitor suspicious transactions.
The issue gained further attention after Bengaluru-based blockchain research organisation Digital South Trust reportedly tested a Visa-backed RedotPay virtual card and documented its use for domestic online purchases. The organisation subsequently shared its findings with relevant authorities.
Meanwhile, several Indian users have reported difficulties accessing their crypto cards since late October 2026. Some have complained that their cards stopped functioning for domestic transactions.
However, there has been no publicly confirmed nationwide shutdown or formal enforcement announcement by the RBI against any specific crypto card provider. The exact reasons behind individual card deactivations also remain unclear.
The reported scrutiny comes at a time when stablecoins are becoming increasingly integrated with traditional international payment infrastructure. Dollar-backed digital assets are emerging as an alternative funding mechanism for payment cards, creating new challenges for regulators seeking to monitor cross-border financial activity.
For Indian cryptocurrency users, the development could have significant implications. Offshore crypto cards that previously offered convenient spending options may face additional restrictions, verification requirements or limitations on domestic transactions.
It is important to distinguish between cryptocurrency ownership and the use of cryptocurrency as a payment instrument. The scrutiny of offshore crypto cards does not automatically mean that owning Bitcoin or other virtual digital assets has become illegal in India.
The central question now is whether international payment networks and offshore fintech companies can continue offering crypto-funded payment services to Indian residents while complying with the country’s financial, foreign exchange and anti-money-laundering requirements.
As the RBI and FIU-IND examine the issue, India’s approach to cryptocurrency-funded payments could become an important development for the country’s wider digital asset industry.
