By India’s Reserve Bank of India (RBI) and Financial Intelligence Unit-India (FIU-IND) are reportedly scrutinising offshore cryptocurrency payment cards that allow residents to spend digital assets at domestic merchants and withdraw rupees from ATMs.
The investigation, reported by The Economic Times on November 2, 2026, concerns prepaid cards offered by international fintech providers, including RedotPay, that operate through Visa and Mastercard payment networks.
According to two people familiar with the matter, regulators are examining whether these arrangements circumvent Indian payment regulations, foreign exchange restrictions and anti-money laundering requirements.
Several users have reported that their cards stopped functioning in India in recent days, while access to certain providers’ websites has reportedly been restricted.
Sources indicated that authorities are communicating with Visa and Mastercard, although neither payment network nor the RBI publicly confirmed those discussions. No formal enforcement order specifically naming RedotPay has been announced.
Offshore Crypto Cards Raise FEMA and KYC Concerns
The cards allow users to fund overseas cryptocurrency wallets with digital assets, including dollar-pegged stablecoins, and spend their balances through conventional payment terminals.
When a customer makes a purchase, the offshore provider converts the relevant cryptocurrency balance into fiat currency, enabling the merchant to receive payment through existing card infrastructure. The arrangement can make crypto-funded purchases resemble ordinary debit card transactions, even though the underlying assets are held outside India’s banking system.
According to the report, some cards cost approximately $40 to $50, remain valid for three years and support substantial transaction limits. Users have reportedly employed them for online shopping, mobile recharges, travel bookings and ATM withdrawals.
The scrutiny follows research conducted by Bengaluru-based Digital South Trust, which obtained a virtual Visa-backed RedotPay card and completed domestic online transactions in August. The organisation subsequently shared its findings with Indian authorities.
Its founder, Sudhakar Lakshmanaraja, raised concerns that some offshore card programmes advertise limited identity-verification requirements, potentially weakening transaction monitoring. Legal specialists also highlighted possible implications under the Foreign Exchange Management Act, 1999, and India’s rules governing prepaid payment instruments.
Harshal Bhuta of Ascentium India said offshore crypto cards could bypass domestic payment authorisation requirements when foreign custodians automatically convert cryptocurrency into rupees. Manavendra Mishra of Khaitan & Co noted that regulators could use blockchain analytics to investigate token ownership and identify potentially illicit funds.
However, whether particular transactions violate Indian law depends on their structure and applicable regulatory obligations.
India Tightens Oversight as Stablecoin Payments Expand
The investigation comes amid broader Indian efforts to regulate cryptocurrency service providers operating from overseas. In September 2026, FIU-IND issued noncompliance notices to 15 virtual digital asset service providers, including Weex, Blofin, Bitunix and ChangeNow.
Authorities also sought restrictions on their websites and applications. Under India’s anti-money laundering framework, qualifying digital asset service providers must register with FIU-IND and comply with customer verification, recordkeeping and suspicious transaction reporting requirements.
These obligations can apply to offshore businesses serving Indian customers. The latest scrutiny also raises questions about taxation, as crypto-funded purchases may involve taxable transfers of digital assets without transactions passing through domestic exchanges.
India generally imposes a 30% tax on income from virtual digital asset transfers, alongside applicable withholding requirements. Meanwhile, stablecoin-linked card programmes are expanding internationally. Visa reported more than 225 stablecoin-linked card programmes in October, with spending volume increasing over 150% year over year across approximately five million cards in more than 50 countries.
Its annualised stablecoin settlement run rate exceeded $25 billion, although that measure is distinct from consumer card spending. For Indian users, the immediate concern is whether offshore cards will remain operational and how existing balances can be accessed if services are restricted.
For regulators, the issue is whether cryptocurrency-funded payments operating through international card networks comply with domestic financial oversight. Until formal findings emerge, the reported scrutiny should not be interpreted as a confirmed violation by RedotPay, Visa or Mastercard.