India’s financial regulators have reportedly begun examining offshore cryptocurrency payment cards that allow residents to spend digital assets in rupees, following concerns over foreign exchange compliance and transaction monitoring.
Summary
- India’s RBI and FIU are reportedly examining offshore crypto cards used for everyday purchases and ATM withdrawals.
- RedotPay is among the providers whose cards allow cryptocurrency balances to fund payments through traditional card networks.
- Several Indian users have reported card deactivations, although regulators have not announced a formal enforcement action.
- Legal experts have raised concerns about foreign exchange rules, customer verification and cryptocurrency transaction monitoring.
- The scrutiny comes as RedotPay continues preparing for a potential U.S. initial public offering.
According to The Economic Times, the Reserve Bank of India (RBI) and Financial Intelligence Unit-India (FIU-IND) are scrutinizing prepaid crypto cards offered through overseas companies, including RedotPay. Two people familiar with the matter told the newspaper that authorities were examining how the products operate within India’s payment system.
Several residents have reportedly experienced card deactivations and difficulties accessing providers’ websites. Neither regulator has publicly announced a ban or confirmed an enforcement measure against RedotPay.
RBI and FIU examine offshore crypto card payments
Offshore crypto cards allow customers to fund purchases using cryptocurrencies held through accounts with foreign service providers.
When a customer makes a payment, the service converts the necessary digital assets into local currency through an arrangement connected to a conventional card network.
Merchants receive payment through familiar card infrastructure, even though the customer originally funded the transaction using Bitcoin, stablecoins or other cryptocurrencies.
Providers such as RedotPay offer cards linked to Visa, while other offshore programs use Mastercard-supported arrangements.
According to the report, Indian residents have used these products for online shopping, mobile recharges and flight bookings.
Physical cards have reportedly been used to withdraw rupees from ATMs operated by major Indian banks.
Some prepaid crypto cards cost between $40 and $50 and remain valid for approximately three years.
The reported scrutiny followed information submitted by Bengaluru-based blockchain research organization Digital South Trust.
Its founder, Sudhakar Lakshmanaraja, said the organization obtained a virtual Visa-backed RedotPay card in August and completed several domestic online transactions.
The organization subsequently shared its findings with Indian authorities.
Lakshmanaraja said certain offshore card programs advertise limited customer verification requirements, raising questions about how financial institutions identify users and monitor transactions.
Indian users report crypto card deactivations
Reports of interrupted card services began appearing on social media in late October.
Affected users said their prepaid cards had stopped working for payments within India, while some reported losing access to related websites.
Sources cited by the newspaper suggested that payment networks might have started restricting transactions involving offshore cryptocurrency cards.
However, Visa, Mastercard and the RBI did not respond to requests for comment made by the publication.
No official notice has established which companies initiated the reported restrictions or whether they apply to every offshore crypto card.
RedotPay’s product documentation describes virtual and physical cards that convert cryptocurrency into local currency during payment processing.
The service supports several digital assets, including Bitcoin, Ethereum, USDT and USDC.
Its published features include merchant payments and ATM withdrawals through physical cards, subject to service availability.
The reported disruptions have raised questions about whether Indian customers can continue using offshore-issued cards under existing payment rules.
Foreign exchange rules raise concerns for crypto cards
India’s Foreign Exchange Management Act governs certain transactions involving foreign currency, overseas payments and cross-border financial arrangements.
According to legal experts quoted by The Economic Times, crypto-funded cards may raise compliance questions because users can hold assets with overseas custodians while making payments to domestic merchants.
Manavendra Mishra, a white-collar crime and investigations partner at Khaitan & Co, warned that many customers may not understand the foreign exchange requirements associated with these arrangements.
He described the exposure as “cross-border, not just domestic.”
Harshal Bhuta, co-founder and international tax and FEMA specialist at Ascentium India, raised questions about whether offshore crypto cards comply with India’s prepaid payment instrument and payment settlement frameworks.
India has already tightened restrictions on crypto through recommendations concerning bank exposure and the use of privately issued stablecoins in payments.
Separately, FIU-IND issued notices to 15 offshore cryptocurrency platforms in September over alleged failures to meet anti-money-laundering requirements.
The government said qualifying virtual asset businesses serving Indian customers must comply with reporting obligations regardless of their physical location.
RedotPay’s IPO plans face new regulatory attention
The reported examination comes during a period of expansion for RedotPay, which offers stablecoin payment services across international markets.
In September, the company completed financial and compliance reviews as part of its preparations for a potential U.S. initial public offering.
RedotPay said the process included financial auditing and a separate assessment of anti-money-laundering controls.
The company disputed earlier reports that its proposed listing had been postponed and said it continued working with advisers.
RedotPay had approximately 8.5 million users by July and was reportedly seeking a valuation exceeding $5 billion.
Its international expansion coincides with growing stablecoin card usage.
According to previous stablecoin spending data, cumulative card payments exceeded $10.9 billion by August 2026.
Paymentscan figures cited by RedotPay showed that July alone recorded more than $1 billion in stablecoin card spending, the highest monthly figure in the dataset.
