Indians can use crypto to buy groceries, fuel and gold through overseas gift-card platforms
Indians can use cryptocurrencies to buy goods and services domestically through overseas fintech platforms that convert stablecoins and other virtual digital assets into gift cards and vouchers. The mechanism, involving foreign platforms and Indian voucher partners, has drawn regulatory attention over potential gaps in cross-border payment, tax and AML oversight.
Mumbai: Many individuals earning cryptocurrencies, either legally or illegally, can utilize them to purchase a wide range of goods and services in India. These transactions occur through overseas gift-card platforms operated by fintech and e-commerce companies based in countries like Sweden, Germany, and Singapore. Indian users acquire gift cards or vouchers by sending stablecoins from their private e-wallets to these foreign entities.
The offshore platforms then purchase gift vouchers in bulk from Indian firms, which act as partners for these closed-loop prepaid cards. These cards can only be used for specific purchases from certain brands and stores, and have no monetary limits, therefore avoiding regulation by the Reserve Bank of India (RBI). The overseas platforms either possess digital card codes or generate them through technology tie-ups with Indian partners.
The cryptos, typically USDT or other stable coins, are sold by the platform's parent or associate firm to settle payments with Indian voucher partners. Recently, an advisory from a blockchain research organization brought this mechanism to the attention of finance and home ministry officials. This round-tripping process, which involves local intermediaries and India-facing channels for crypto-to-voucher conversion, merits further examination for regulatory oversight.
Users often avoid withdrawing cryptocurrencies from Indian exchanges and instead move coins directly to overseas platforms, earning margins from crypto-to-voucher conversion rates. These platforms issue gift cards at a rate lower than the market value, generating profits from the difference. Although cryptocurrencies are not reported in income tax returns or taxed, if the source of the cryptocurrency is suspect, it raises concerns about tax evasion and money laundering.
The Indian government has strict rules for cross-border payments, but there is a need for clear guidance on crypto transfers under the foreign exchange framework, especially when converted into vouchers for domestic purchases.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
