Indians are converting cryptocurrency into domestic gift cards and vouchers through overseas fintech platforms, creating a payment channel that spans groceries, fuel, mobile recharges, food delivery, and gold purchases without triggering the regulatory frameworks that govern either cross-border payments or standard crypto transactions in India, according to Economic Times.
JUST IN: š®š³ Indians are using crypto to buy groceries, fuel and gold through overseas gift-card platforms - Economic Times. pic.twitter.com/SU5cr4MxeS
ā Whale Insider (@WhaleInsider) September 8, 2026
The mechanism works through a specific structural arrangement. Users send stablecoins or other virtual digital assets from private wallets to foreign platforms. Those platforms acquire vouchers in bulk from Indian issuers and aggregators, then sell the crypto abroad. The proceeds settle payments with Indian voucher partners. The end user receives a closed-loop prepaid instrument tied to a specific brand or store, which they then spend on domestic purchases.
Sudhakar Lakshmanaraja, Founder of Digital South Trust, described the scope of what has been identified:
"Our key finding is that several overseas crypto payment platforms accessible to Indian users, with payment pathways involving local intermediaries and India-facing channels that enable crypto conversion into vouchers used for direct payments for goods and services."
Why gift vouchers currently sit outside RBI oversight
The regulatory gap rests on how gift vouchers are classified. Because closed-loop prepaid cards cannot be used for third-party payments or cash withdrawals, they fall outside the Reserve Bank of India's current regulatory perimeter. The RBI's prepaid payment instrument framework covers instruments that allow funds to be transferred to third parties or withdrawn as cash. A voucher that can only be redeemed at a specific retailer or group of retailers does not meet that definition.
The RBI has been tightening oversight of crypto-adjacent activity through other channels. In July 2026, the central bank recommended keeping banks and payment systems insulated from cryptocurrencies while India's broader digital asset policy remained under review. The RBI also told lawmakers that tokenized regulated financial assets should be distinguished from cryptocurrencies so that restrictions on speculative digital assets do not interfere with legitimate tokenization projects. The gift voucher channel sits in neither category cleanly, which is precisely why it has attracted regulatory attention.
India's crypto tax framework and the foreign exchange angle
India introduced a 30% flat tax on cryptocurrency gains and a 1% tax deducted at source on crypto transfers in 2022. The TDS provision applies to transfers on domestic exchanges and is designed to create an audit trail. Transfers from private wallets to foreign platforms do not pass through the domestic TDS collection mechanism, which creates a gap between what Indian crypto holders are required to report and what tax authorities can automatically detect.
The Foreign Exchange Management Act governs cross-border capital flows in India. FEMA's liberalized remittance scheme allows Indian residents to remit up to $250,000 abroad per financial year for permitted purposes. Sending cryptocurrency to a foreign platform in exchange for domestic vouchers does not fit neatly into any of FEMA's defined remittance categories. Crypto assets are not recognized as foreign exchange under FEMA's current definitions, which means the transfer may not constitute a remittance in the regulatory sense while still moving value across borders. That ambiguity is what industry experts have called on regulators to address through explicit guidance under the foreign exchange framework.
How the voucher supply chain operates in India
India's gift voucher and prepaid card market has grown substantially over the past decade. The Prepaid Transaction Industry Association of India estimated the country's gift card market was worth approximately $7.6 billion in 2023, with growth driven by corporate gifting, loyalty programs, and employee benefits. Major voucher aggregators in India work with hundreds of brands across retail, food, fuel, and entertainment. Bulk procurement arrangements, where a large buyer acquires vouchers at a discount from face value, are standard commercial practice in this market. A foreign platform acquiring Indian vouchers through a local aggregator fits within existing commercial frameworks even when the settlement currency on the foreign platform's side is cryptocurrency.
The arrangement also creates anti-money laundering concerns distinct from the tax and foreign exchange questions. Crypto sent from India to a foreign platform converts into a domestic spending instrument without creating the transaction trail that a bank transfer would generate. Law enforcement advisers have raised the possibility that the channel could be used to convert crypto proceeds of crime into usable domestic purchasing power without triggering AML detection at any point in the chain.
India's Financial Intelligence Unit has been active in the crypto space. In December 2023, the FIU issued show-cause notices to nine offshore crypto exchanges operating in India without registration, leading to access blocks for platforms including Binance, Kraken, and KuCoin. Those platforms subsequently registered with the FIU to restore access. The registration requirement applies to virtual digital asset service providers operating in India, but a foreign platform that does not market its services directly to Indian users while still being accessible to them presents a harder enforcement question.
The Economic Times reported the findings as drawing attention from regulators and law enforcement advisers over potential gaps in cross-border payment, tax, and AML oversight. No regulatory action had been announced at the time of publication. The RBI and India's tax authority have not publicly commented on the specific voucher conversion mechanism described in the report.
Matvii Diadkov
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