India’s Regulators Target Offshore Crypto Payment Cards

The scrutiny centers on prepaid cards offered by foreign entities such as RedotPay, which facilitate transactions by converting cryptocurrencies like Bitcoin or stablecoins into local currency at the point of sale. While these cards operate through traditional networks like Visa and Mastercard, they allow users to bypass domestic financial oversight by keeping assets with overseas custodians. Reports of card deactivations and blocked website access have surfaced across social media, signaling that payment networks may already be restricting these services.

Legal experts suggest that these arrangements likely violate the Foreign Exchange Management Act and India’s prepaid payment instrument frameworks. Manavendra Mishra of Khaitan & Co noted that users often fail to recognize the cross-border implications of these cards, which effectively turn domestic purchases into international transactions. The investigation follows a tip from the Bengaluru-based Digital South Trust, which demonstrated how easily such cards could be used for domestic payments despite minimal customer verification. The pressure on these providers comes as RedotPay moves forward with plans for a U.S. initial public offering, aiming for a valuation north of $5 billion.