How to Launch a Crypto Wallet in India: Legal Guide?

India’s cryptocurrency ecosystem has been rapidly evolving, driven by a surge in digital adoption, blockchain innovation, and global investor interest. With over 150 million crypto users, India is among the largest crypto markets worldwide. As digital assets become mainstream, crypto wallets are emerging as the gateway to blockchain adoption allowing users to securely store, transfer, and trade cryptocurrencies.

If you’re an entrepreneur, fintech startup, or blockchain enthusiast planning to launch a crypto wallet in India, understanding the legal, regulatory, and operational aspects is crucial. While India has not fully legalized crypto as legal tender, regulatory clarity around taxation, compliance, and anti-money laundering (AML) requirements is shaping a framework for legitimate businesses.

This guide will help you navigate the legal roadmap, technical requirements, and business opportunities for launching a crypto wallet in India in 2025.

What is a Crypto Wallet?

A crypto wallet is a digital tool that allows users to store, send, and receive cryptocurrencies securely. Unlike traditional wallets, it does not hold physical money but manages cryptographic keys, private keys and public addresses that enable secure transactions on blockchain networks.

Types of crypto wallets include:

• Hot Wallets (Online):Connected to the internet, convenient for quick transactions but vulnerable to hacks.
• Cold Wallets (Offline):Hardware or paper-based, offering higher security for long-term storage.
• Custodial Wallets:Managed by a third party (like exchanges).
• Non-Custodial Wallets:Users hold full control of their private keys.

For entrepreneurs, deciding the wallet type, custodial vs non-custodial, hot vs cold will directly influence compliance, user adoption, and trust.

The Legal Status of Cryptocurrency in India (2025)

India does not recognize cryptocurrencies as legal tender, but they are not banned either. Instead, the government regulates them under financial and tax frameworks:

Taxation

Since April 2022, profits from crypto transactions are taxed at 30%, with an additional 1% TDS per transaction, significantly impacting traders, investors, and crypto wallet users in India.

Prevention of Money Laundering Act (PMLA)

In March 2023, crypto businesses, including wallet providers, were brought under PMLA, mandating strict KYC/AML compliance to prevent illicit activities and align with financial sector regulations in India.

RBI’s Stance

The Reserve Bank of India highlights crypto-related financial risks, discourages speculative use, but simultaneously encourages blockchain technology adoption for innovation, efficiency, and secure digital finance infrastructure development in India.

Regulatory Gray Area

Cryptocurrency is neither banned nor fully legalized in India, creating uncertainty. While a dedicated crypto law is still awaited, businesses operate in a gray zone under existing financial regulations.

For wallet providers, this means:

• You can legally launch and operate a crypto wallet in India.
• Compliance with taxation, KYC (Know Your Customer), and AML normsis mandatory.
• Partnerships with regulated financial institutions add credibility.

Legal Requirements for Launching a Crypto Wallet in India

Launching a crypto wallet requires strict compliance with Indian financial and IT regulations. Below are the key legal checkpoints:

Company Registration

To launch a crypto wallet in India, the first step is to formally register your business as either a Private Limited Company or a Limited Liability Partnership (LLP) under the Companies Act, 2013. This ensures your venture has a legal identity and recognition.

In addition, you may need to obtain a GST registration if your services fall under the taxable bracket. It is also essential to maintain accurate and transparent financial records, as these will be crucial during taxation and statutory audits, providing credibility and compliance assurance.

Compliance with PMLA (2023)

Since March 2023, crypto wallet providers in India have been categorized as “Reporting Entities” under the Prevention of Money Laundering Act (PMLA). This means they are required to implement strict Know Your Customer (KYC) and Anti-Money Laundering (AML) policies to verify the identities of users before providing services.

Wallet operators must also report any suspicious or unusual transactions to the Financial Intelligence Unit (FIU-IND), ensuring that their platforms are not misused for illicit financial activities.

KYC & User Verification

User verification is a mandatory compliance step for wallet providers in India. To meet this requirement, companies must collect critical identification details such as PAN, Aadhaar, and bank account information from their users.

These processes should follow RBI-approved KYC norms, which add legitimacy and prevent fraud. For seamless onboarding, businesses are encouraged to integrate automated e-KYC APIs that can verify users in real time while offering a smooth customer experience.

Data Protection & Privacy Laws

Crypto wallet businesses must also adhere to the Digital Personal Data Protection Act (DPDP), 2023, which lays down strict rules for handling and protecting personal information. Service providers are expected to store user data securely and implement privacy policies that align with global standards like GDPR.

Moreover, explicit user consent must be obtained before collecting, storing, or processing personal data, ensuring transparency and building trust with customers.

Technology and Cybersecurity Compliance

Operating a crypto wallet requires strict adherence to cybersecurity norms. Companies must comply with the guidelines set by the Indian Computer Emergency Response Team (CERT-In). These rules emphasize the importance of maintaining audit trails, system logs, and other monitoring mechanisms to detect and prevent threats.

Additionally, adopting internationally recognized security frameworks such as ISO 27001 further strengthens data protection measures and safeguards users against cyber risks.

Taxation & Accounting

Tax compliance plays a vital role in crypto wallet operations. Providers are responsible for ensuring that a 1% Tax Deducted at Source (TDS) is applied to eligible transactions, wherever applicable.

At the same time, businesses must maintain transparent accounting systems that record both crypto-to-crypto and crypto-to-fiat conversions. Furthermore, it is the responsibility of wallet operators to inform users about their tax obligations so they can comply with Indian tax laws effectively.

Intellectual Property & Licensing

To protect your crypto wallet business, securing intellectual property rights is equally important. This includes trademarking the brand name and logo to establish ownership and prevent misuse. Additionally, wallet providers must obtain the necessary software licenses for encryption technologies, APIs, and security tools that support wallet infrastructure.

Drafting legally sound user agreements and terms of service documents is also essential, as these clarify potential risks, liabilities, and responsibilities between the company and its users.

Steps to Launch a Crypto Wallet in India

Here’s a step-by-step roadmap for entrepreneurs and startups:

Step 1: Market Research & Business Model

Conduct competitor analysis, define wallet type (custodial/non-custodial), and identify revenue sources like transaction fees, staking, or premium services to establish a sustainable and competitive business model.

Step 2: Legal Consultation & Registration

Engage crypto-fintech legal experts, register your business with the Ministry of Corporate Affairs, and design compliance frameworks including KYC, AML, and privacy policies to ensure regulatory preparedness.

Step 3: Technology Development

Collaborate with blockchain development experts, choose wallet type (mobile, desktop, extension, or hardware), and ensure multi-currency compatibility with BTC, ETH, stablecoins, and emerging digital tokens for scalability.

Step 4: Security Implementation

Adopt multi-layered encryption, biometrics, 2FA and secure wallet protection techniques ensure with recovery mechanisms, and schedule third-party audits to maintain robust protection against hacks and breaches.

Step 5: Banking & Payment Integration

Integrate payment gateways and UPI, enable fiat-crypto conversions where permitted, and ensure smooth deposit and withdrawal processes for Indian users, creating a seamless user experience.

Step 6: Compliance Setup

Build a compliance team, submit regular FIU-IND reports, and maintain detailed user transaction logs to support audits, foster trust, and demonstrate adherence to evolving regulations.

Step 7: Marketing & User Acquisition

Leverage blockchain influencers, fintech communities, and educational platforms, introduce referral rewards, and highlight wallet trust, security, and usability to attract, retain, and expand your user base.

Key Challenges in Launching a Crypto Wallet in India

Regulatory Uncertainty

The lack of clear, comprehensive crypto legislation in India creates legal ambiguity. Startups face uncertainty about compliance, operational limits, and future restrictions, impacting investor confidence and long-term business planning.

Banking Hurdles

Most traditional banks remain hesitant to support crypto businesses due to regulatory risks. This limits smooth fiat integration, increases reliance on third-party payment processors, and complicates user transactions in India.

High Taxation

India’s 30% tax on crypto gains and 1% TDS on transactions significantly reduce profitability. These measures discourage frequent trading, deter new users, and affect overall adoption of crypto wallets.

Security Risks

Cyber threats like hacking, phishing, and malware attacks constantly endanger crypto wallets. Businesses must invest in multi-layer security, audits, and advanced protocols to protect assets and maintain user trust.

User Education

A large portion of Indians remain unfamiliar with blockchain and cryptocurrencies. Companies must run educational campaigns, simplify wallet usability, and build trust to encourage mainstream adoption and responsible trading.

Future of Crypto Wallets in India

Despite regulatory hurdles, crypto adoption in India is accelerating. The future outlook includes:

Integration with CBDCs (Central Bank Digital Currency)

As the RBI launches the Digital Rupee, crypto wallets may integrate support, enabling seamless transactions. This integration would boost trust, drive adoption, and align wallets with India’s regulated digital financial ecosystem.

Web3 & DeFi Growth

With Web3 innovations, wallets will expand beyond storage into NFTs, staking, and dApps. This evolution positions wallets as gateways for decentralized finance participation, empowering users with broader financial opportunities and blockchain-driven ownership.

Global Expansion

Indian crypto wallet providers can target international markets, offering secure, cost-effective solutions. Global expansion enables cross-border collaborations, remittances, and trade, strengthening India’s position in the global crypto economy and boosting business opportunities.

Institutional Adoption

Enterprises may adopt crypto wallets for cross-border settlements, payments, and investments. This adoption enhances efficiency, reduces costs, and legitimizes crypto use, fostering mainstream financial integration and building confidence among regulators, investors, and businesses. 

Why Partner with Technoloader for Your Crypto Wallet?

If you are looking for a crypto wallet developer in India, we are the one-stop solution for you. At Technoloader, we specialize in delivering comprehensive crypto wallet development services designed to meet the needs of both Indian and global markets. Our wallet solutions are built with regulatory compliance in mind, ensuring alignment with evolving Indian laws and tax policies.

With bank-grade security, advanced encryption, and multi-factor authentication, we safeguard user assets against rising cyber threats. Supporting multi-chain and multi-currency transactions, our wallets cater to diverse traders and investors. We also provide complete customization for branding and scalability, empowering businesses to launch custodial, non-custodial, or enterprise-grade wallets that are secure, compliant, and future-ready for the growing crypto ecosystem in India.

Conclusion

Launching a crypto wallet in India in 2025 requires balancing innovation with compliance. While regulations are still evolving, businesses that adopt transparent practices, prioritize security, and build user-friendly solutions will thrive. By aligning with legal frameworks and leveraging expert development partners, you can successfully tap into India’s rapidly expanding crypto economy.

The future belongs to digital assets, and crypto wallets are the first step in unlocking financial freedom for millions of Indians.

FAQs

Is it legal to launch a crypto wallet in India?

Yes, launching a wallet is legal, provided you comply with taxation, PMLA guidelines, and KYC/AML regulations.

Do I need RBI approval to launch a crypto wallet?

Not directly, but compliance with PMLA and financial regulations is mandatory. Partnering with RBI-regulated banks adds credibility.

What taxes apply to crypto wallet users?

Users must pay 30% tax on profits and 1% TDS on transactions. Wallet providers must facilitate transparent reporting.

Can I integrate UPI and bank transfers in my wallet?

Yes, but only through approved payment partners and in compliance with banking norms.