RBI and FIU scrutinise offshore crypto cards used by Indians

In short

• The RBI and FIU are examining offshore crypto cards Indians use to spend crypto as rupees, The Economic Times reported on 2 November 2026.
• The newspaper, citing two unnamed sources, said the cards may breach payment rules and FEMA, India's foreign exchange law.
• Several users have reported their cards stopped working in India in recent days, according to The Economic Times.
• The RBI, Visa and Mastercard did not respond to the newspaper's queries, so no regulator has confirmed the scrutiny.

India's central bank and its financial intelligence agency are examining offshore crypto cards that Indian residents use to pay for everyday things, The Economic Times reported on 2 November 2026, citing two people it did not name. The Reserve Bank of India (RBI) and the Financial Intelligence Unit (FIU), the agency that tracks suspicious transactions, are looking at whether the cards break payment rules and the Foreign Exchange Management Act (FEMA), the law that governs cross-border money flows, according to the newspaper. Several users have reported in recent days that their cards stopped working, The Economic Times reported.

How offshore crypto cards work for Indians

Crypto cards are prepaid cards from foreign fintechs, such as RedotPay, that run on the Visa and Mastercard networks. A user tops the card up with crypto, often a stablecoin, a token pegged to a currency such as the dollar, and the card converts it to rupees when they pay. To an Indian merchant the payment looks like any other debit card. The Economic Times reported that the cards cost about $40-50, carry roughly three-year validity and come with high daily limits.

The Economic Times reported that over the past few days some Indian residents lost access to their prepaid crypto cards and to the websites of the providers. It said sources do not rule out Visa deactivating crypto cards for transactions within or from India. The newspaper also reported videos circulating of people using physical crypto cards to take cash from ATMs of large Indian banks without holding an Indian bank account, with crypto in their wallets converted to pay the bank.

Why Digital South Trust alerted authorities

The scrutiny may have been set off by alerts from Digital South Trust, a blockchain research non-profit in Bengaluru. Its founder, Sudhakar Lakshmanaraja, told The Economic Times that the group obtained a virtual Visa-backed RedotPay card, made several domestic online purchases with it in August, and sent the card and purchase details to Indian authorities. "We independently examined multiple crypto-card programmes, documented their use for everyday payments in India, and submitted the findings to relevant authorities," Lakshmanaraja said, according to the newspaper.

According to The Economic Times, sources indicate that the RBI and FIU have been in contact with Visa and Mastercard over the cards. Neither the regulator nor the two payment networks answered the paper's questions, so the scrutiny rests on unnamed sources rather than any official statement. The paper noted that the cards could breach several Indian laws: attaching a crypto wallet to an overseas provider, settling purchases in crypto, which India does not recognise as currency, and paying parties abroad may each raise FEMA concerns.

Manavendra Mishra, a white collar crime and investigations partner at law firm Khaitan & Co, told The Economic Times that many individual users are unaware of the FEMA implications, and that agencies can use chain analysis, which traces the path of tokens on a blockchain, to pursue them. "The risk is cross-border, not just domestic," Mishra said, according to the newspaper. Harshal Bhuta, co-founder and country co-head of international tax and FEMA at Ascentium India, told the newspaper that a foreign crypto debit card sidesteps India's rules for prepaid payment instruments and payment and settlement systems, and raises FEMA concerns because the wallet balance sits with a foreign custodian and is converted to rupees automatically.

The global growth of crypto card spending is largely driven by stablecoins. Vedang Ratan Vatsa, founder of the Web3 research platform Hashtag Web3, told The Economic Times that Visa has disclosed more than 150% growth in volume across 5 million cards, with a stablecoin settlement run rate above $25bn in annualised volume. Vatsa said the cards look less like a parallel payment system and more like an extra funding layer on the existing card networks.

Indian crypto users react: a delay, not a loophole

On X, users and commentators argued over what the scrutiny means. Defi Sir (@TheDefiSir) said on X that the cards left no KYC trail and no TDS, the tax deducted at source on Indian payments, and carried FEMA exposure, adding that the card was "never a loophole, just a delay". Veda sarathi vadivel (@Vedasarathi11) said on X that a Visa logo never made crypto legal tender and that a card failing one morning is the risk users signed up for. Archit Haria (@ArchitHaria) said on X, in Hindi, that tax has nothing to do with it and the aim is to protect bank profits, while hitman42 (@ihitman42) asked on X why the government does not regulate the cards and win.

Will my offshore crypto card still work in India?

Some have not: several users have reported their cards stopped working in India, and no regulator or payment network has published a notice, deadline or list of affected cards.

If you hold one of these cards, the practical risk is that it stops working before you get any notice. The Economic Times reported that users have already found their cards unusable in India, and that the RBI and FIU are examining possible FEMA and payment-rule breaches. The newspaper reported no official statement from the RBI, Visa or Mastercard, so there is no published deadline or list of affected cards to check against. Anyone who has spent crypto through an offshore card should keep their own records of those transactions, because the lawyers quoted by The Economic Times say agencies can trace token flows on the blockchain.

The payment networks will shape what happens next. The Economic Times reported that, according to sources, the RBI and FIU are in contact with Visa and Mastercard, and that those sources have not ruled out Visa switching off crypto cards for transactions in India. At the time of publication, the paper had no response from the RBI, Visa or Mastercard.

Card costs and Visa stablecoin volumes

Questions readers ask

Are offshore crypto cards legal for Indian residents?

Crypto cards are prohibited in India, and The Economic Times reported that using them may breach the Foreign Exchange Management Act and payment rules. The newspaper said linking a crypto wallet to a foreign provider, paying with crypto and paying overseas parties can all raise FEMA concerns. No regulator has issued a statement on the cards.

Why have some crypto cards stopped working in India?

Several users have reported that their prepaid crypto cards could not be used in India in recent days, according to The Economic Times. The newspaper said sources do not rule out Visa deactivating crypto cards for transactions within or from India. Neither Visa nor the RBI has confirmed any action.

What should Indian crypto card users check now?

The Economic Times reported no official notice, deadline or list of affected cards. Users can check whether their card still works and keep records of past crypto-funded payments, because the lawyers quoted by the newspaper say agencies can trace token flows on the blockchain. The RBI, Visa and Mastercard have not commented publicly.

Our view: enforcement catching up with a grey rail

At InvestIn.News, we see this as enforcement catching up with a grey payment rail that let crypto spending pass for an ordinary Visa swipe. The Economic Times attributes the RBI and FIU interest to unnamed sources, and none of the RBI, Visa or Mastercard has confirmed it, so readers should treat the scrutiny as reported rather than announced.

The clearest public risk sits with users, not with the card programmes. The lawyers quoted by The Economic Times say many holders are unaware of the FEMA implications, and that agencies can trace token flows with chain analysis. A card that stops working one morning is the visible part; the compliance exposure behind it lasts longer.

The scale explains the attention. Visa has disclosed more than 150% growth in volume across 5 million cards and a stablecoin settlement run rate above $25bn annualised, according to Vedang Ratan Vatsa of Hashtag Web3, which makes these cards a funding layer on the card networks rather than a niche experiment.

We would treat confirmation from Visa or Mastercard that Indian transactions are being blocked, or a public statement from the FIU, as the development that settles how far this has gone.

The story actually draws on information from two anonymous sources and findings submitted by the blockchain research entity Digital South Trust rather than 7 public posts. Read the full story at The Economic Times

Follow the latest news as it breaks on Stablecoins NewsFeeds.

What to watch: Watch for any confirmation from Visa or Mastercard on blocking Indian transactions, and for a public statement from the RBI or FIU.