- Crypto cards have caught the RBI’s attention as Indians use offshore wallets for everyday payments.
- Offshore crypto cards let Indians spend crypto on everyday purchases without direct INR conversion.
- Some users have reported card deactivations, as authorities examine potential payment and FEMA violations.
Crypto cards that allow Indian residents to spend digital assets on domestic purchases and withdraw cash using offshore wallets have come under the scrutiny of the Reserve Bank of India (RBI) and the Financial Intelligence Unit-India (FIU-IND).
In recent days, several users have reported card deactivations, while authorities investigate possible violations of the Foreign Exchange Management Act (FEMA) and payment regulations.
How Offshore Crypto Cards Work
Offshore crypto cards are prepaid cards that are issued by international fintech companies like RedotPay and run on global networks like Visa and Mastercard. Digital assets, usually dollar-backed stablecoins, are loaded by Indian residents into special offshore wallets associated with these cards.
At the point of payment, the provider converts the crypto balance into Indian rupees behind the scenes. The transaction looks like a normal debit or prepaid card transaction from a regular bank card to local merchants, online platforms, or ATM networks. Users have used them for everyday use such as recharging mobiles, online shopping, booking flights, and withdrawing cash from ATMs of big banks in India.
Furthermore, these cards are generally priced at $40–$50 and have daily transaction limits that are relatively high, with a validity period of three years. Some programmes have advertised limited or no KYC requirements. Importantly, users generally cannot freely transfer coins out of the designated wallets except by spending via the card. The conversion and settlement are made outside India’s local banking system, and this is one of the reasons why the instruments are not directly visible to the Indian banks and regulators.
Related: Offshore Crypto Loophole? Indians Turn to Gift Cards to Bypass Visibility
Why Are RBI and FIU-IND Scrutinising Crypto Cards?
The RBI and the FIU-IND are examining these offshore cards over potential violations of India’s payment system regulations and FEMA. Authorities are concerned that the cards enable Indian residents to convert and spend digital assets as rupees for domestic transactions while operating outside the Prepaid Payment Instruments (PPI) framework and the Payment and Settlement Systems Act.
Entities providing prepaid payment services in India normally require RBI authorisation. These arrangements also pose questions regarding unauthorised cross-border fund transfers, inadequate transaction surveillance, and weaknesses in the KYC/AML procedures.
The investigation seems to have been triggered partly by the research of Digital South Trust, a blockchain research organisation based in Bengaluru. In August 2026 the group acquired a virtual Visa-backed RedotPay card, made several domestic online payments, and disclosed the information to the Indian authorities.
Related: India Eyes Crypto-to-Gift Cards: Are Vouchers Becoming a Backdoor Spending Route?
Meanwhile, sources reveal that Visa and Mastercard are in negotiations with RBI and FIU over the issue, although the networks and the central bank have not publicly confirmed the discussions.
What Does RBI’s Scrutiny Mean for Indian Crypto Users?
Legal experts note that linking a crypto wallet held with a foreign custodian and using it to fund Indian rupee payments can breach FEMA provisions. Some programmes’ limited KYC further heightens risks related to source-of-funds verification and beneficial ownership.
Starting around October 29, 2026, several Indian users have claimed that their cards stopped working for domestic transactions. Access to some provider websites has also been limited to Indian IP addresses.
That said, more Indian users could face immediate loss of functionality, potential locked funds, and increased legal/tax exposure. At the time of reporting, there was no official public ban or detailed RBI/FIU statement released; however, the deactivations, website blockages, and the ongoing investigation signal a clear tightening.
Therefore, Indian users who use these cards to make daily payments closely monitor the developments of the investigations and consider formal compliance requirements under FEMA and tax regulations.
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