The present position
No IFSCA framework permits an IFSC unit to deal in, broker, hold in custody or run an exchange for cryptocurrencies or crypto assets. In its February 2025 consultation paper, IFSCA said that it does not intend to regulate, permit trading in or otherwise endorse cryptocurrencies or crypto assets. We do not advise that GIFT IFSC offers a route for crypto-asset broking, custody or exchange.
Each digital-asset proposal therefore has to be analysed against the specific framework it would fall under. The sandbox is often the right starting point for genuinely new models.
What IFSCA has issued
- Payment services. Under the IFSCA (Payment Services) Regulations, 2024, 'money' includes e-money but excludes virtual digital assets, a term the regulations define by reference to section 2(47A) of the Income-tax Act, 1961 (regulation 2(1)(s)). IFSCA's FAQs state that a PSP's e-wallet cannot store cryptocurrencies such as Bitcoin, or stablecoins. E-wallets may hold only the specified currencies: USD, EUR, JPY, GBP, CAD, AUD, CHF, HKD, SGD, AED and RUB.
- Technology services. The Second Schedule to the IFSCA (TechFin and Ancillary Services) Regulations, 2025 includes tokenisation support services and solutions using distributed ledger technology and Web 3.0. These are technology services provided to financial institutions. They do not authorise the provider to issue, trade or hold tokens, and the Third Schedule bars activities regulated under other IFSCA frameworks. See TechFin service providers.
- Sandbox. The FinTech Sandbox Framework, 2026 allows testing of ideas linked to activities IFSCA regulates, within boundary conditions and for a limited period. It is a testing permission, not a licence to operate. See Sandbox tracks.
What IFSCA has consulted on
IFSCA constituted an Expert Committee on Asset Tokenization in September 2023. On 26 February 2025 it published a consultation paper, 'Regulatory Approach towards Tokenization of Real-World Assets', with comments due by 20 March 2025. The paper:
- covers tokenisation of real-world assets only, such as securities, fund units, bonds, deposits, receivables, bullion, commodities and commercial real estate;
- expressly excludes central bank digital currencies, cryptocurrencies, and crypto assets referencing non-financial virtual assets such as artwork, including NFTs;
- states IFSCA's intent to give legal and regulatory recognition to digital tokens representing ownership or beneficial interest in real-world assets, and to develop mechanisms for their issuance, trading, custody, and clearing and settlement; and
- poses questions, in four sets, rather than proposing rule text. The sets cover the definition of digital tokens, market mechanisms, risk management, and growth catalysts, including whether a sandbox approach would help.
This remains a consultation. The IFSCA material we reviewed in October 2026 does not include a final framework issued on it. Until IFSCA issues one, the paper creates no permission.
The onshore position is separate
India's tax and regulatory treatment of crypto assets onshore is a separate subject, governed by the Income-tax Act and by the onshore regulators, not by IFSCA. An IFSC unit is outside India for exchange control. Any flow of money from Indian residents into an IFSC digital-asset structure would still raise FEMA questions on the resident's side. See Residents and LRS.
Analysing a proposal
- Identify the asset or right the token represents. If it is a financial product within section 3(1)(d) of the IFSCA Act, such as a security or a deposit, the framework for that product applies whatever the technology.
- Identify each activity: issuing, dealing, custody, settlement, payment or technology support. Then find the IFSCA framework, if any, that registers it.
- Check exclusions, such as the exclusion of virtual digital assets from 'money' in the payment services regime.
- Where no framework fits, consider the sandbox or IFSCA's informal guidance scheme. See Informal guidance.