Legal Crypto In Dadra and Nagar Haveli and Daman and Diu

Cryptocurrency in Dadra and Nagar Haveli and Daman and Diu: Legality and Market Insights

Cryptocurrencies, digital assets that exist on a decentralized ledger (i.e., blockchain), have become a worldwide phenomenon. In India, their legal standing is still unclear, especially in the union territories such as Dadra and Nagar Haveli and Daman and Diu. This piece covers the legality of cryptocurrencies in this area, the most well-known exchanges and ways to get into, local exchange offices, the law-making regulations, the decentralized finance (DeFi), and the non-fungible token (NFT) markets. It also touches on two topics: taxation of crypto transactions and the involvement of local financial institutions in adoption.

Legality of Cryptocurrency

The status of cryptocurrencies in Dadra and Nagar Haveli and Daman and Diu is consistent with India’s federal model as Union Territories are subject to central government. India doesn’t have specific cryptocurrency legislation, and digital assets are in a regulatory gray area. A 2018 banking ban on crypto transactions, imposed by the Reserve Bank of India (RBI), was overturned by the Supreme Court in 2020, which saw exchanges come to life. But cryptocurrencies aren't legal tender.

This also prohibits objects of VDAs from being converted into Indian partition money, which means virtual digital assets. The government has included cryptocurrencies under VDAs and has categorized them as VDAs. Buying, holding, and transferring cryptocurrencies is allowed, but businesses must follow Know Your Customer (KYC) and Anti-Money Laundering (AML) guidelines under the Prevention of Money Laundering Act, 2002 (PMLA). In Dadra and Nagar Haveli and Daman and Diu, there is no such ban, but the RBI cautions about risks like volatility and fraud. There are no local policies on cryptocurrency, using national ones instead.

Famous Cryptocurrency Exchanges and Ways to Buy Them

Dadra and Nagar Haveli and Daman and Diu residents tend to use Indian crypto exchanges since they offer KYC/AML regulations. Popular platforms include:

• WazirX: Top exchange that serves the Bitcoin (BTC), Ethereum (ETH), and other crypto community, including P2P trades.
• CoinDCX: It has a user-friendly interface, and INR deposits are accepted.
• ZebPay: One of India’s oldest exchanges, with an emphasis on security and ease of use.

Worldwide, Binance and Coinbase are kind of available but not as popular because of very strict KYC and lack of INR support. P2P trading is common, carried out via exchanges or platforms such as LocalBitcoins, where buyers and sellers may deal directly using bank transfers or UPI. There are no crypto ATMs in the area, which is a reflection of India’s infrastructure in that domain as a whole.

Local Exchange Offices

Physical cryptocurrency service centers are rare in Dadra and Nagar Haveli and Daman and Diu, but this is primarily a consequence of the area’s low population and industrial emphasis. Most of the trading happens on the exchanges listed above. In places like Silvassa and Daman, which are part of urban centers, there are a few tech-savvy persons or small firms who provide OTC (over-the-counter) services and serve as an intermediary in exchange of cryptos to fiat. The services, informal and sometimes promoted through local networks or on social media, are risky because they are unregulated. Verify the authenticity of these providers and ensure KYC.

Regulatory Requirements for the Cryptocurrency Market

The national regulatory framework of India hosts the cryptocurrency market in Dadra and Nagar Haveli and Daman and Diu:

• Income Tax Act, 1961: The 2022 legislation requires a 30% tax on gains from VDAs and 1% tax deducted at source (TDS) on transfers exceeding INR 10,000. Losses can't be used against any other income.
• PMLA, 2002: Crypto exchanges must be registered as reporting entities, store transaction information, and report suspicious transactions to the Financial Intelligence Unit (FIU).
• Foreign Exchange Management Act (FEMA), 1999: Regulates cross-border crypto transactions, prohibits the conversion of cryptocurrency to any foreign currency before RBI permission.
• Securities and Exchange Board of India (SEBI): SEBI does not regulate cryptocurrencies; however, for ICOs that look like securities, SEBI has issued guidelines for ICOs to comply with the existing securities laws.

There are no local UT laws in place, but the central government is working on a crypto bill that will be all-encompassing and should add a lot more clarity to the situation.

Decentralized Finance (DeFi) Market

The DeFi market in Dadra and Nagar Haveli and Daman and Diu is still in its early days, which comes as no surprise given India’s reserved stance towards decentralized protocols. DeFi platforms, including Uniswap, Aave, and Compound, mean users can borrow, lend, or trade assets without intermediaries. But acceptance is relatively low because of the lack of awareness, technical difficulties, and regulatory ambiguity. Tech fans in Silvassa and Daman play around with DeFi using Ethereum-based wallets like MetaMask, but high gas fees and fluctuations keep mainstream use at arm’s length. The RBI's concerns around financial stability and the risks of money laundering create another barrier to DeFi expansion. There are no local DeFi projects, with users flocking to global platforms and using VPNs to evade restrictions.

NFT Market (Non-Fungible Token)

The NFT market, in general, is quite nascent in the region. NFTs, or non-fungible tokens, unique digital tokens that represent digital assets and are held on a blockchain, have drawn widespread international interest, with the market growing to $2.5 billion in 2021. But in Dadra and Nagar Haveli and Daman and Diu, NFT activity is scarce, dominated by urban artists and collectors working in a small group. NFTs are usually minted or sold on platforms like OpenSea and Rarible, frequently associated with digital art or collectibles. Local creators struggle too, with the high cost of minting and poor internet infrastructure. There is still a lack of clarity on the regulation front, but NFTs might be open to the same VDA tax laws.

Taxes on Cryptocurrency Transactions

It is important for the crypto economy to also pay taxes in the region. The VDA profit is taxed at 30% starting from 2022 for all residents, giving no exceptions for the small ones. For instance, if you sell Bitcoin and make a profit of INR 50,000, you’ll be taxed INR 15,000. The 1% TDS on transfer makes it complicated since the exchanges need to deduct tax at source. People providing goods or services for cryptocurrencies have to file GST returns as they would for a barter transaction. Failure to comply can result in penalties, so many users turn to tax professionals for help. The high tax rate has led some to argue it dampens innovation, but it also means that the government’s supervisory role can kick in.

The Local Financial Institutions’ Role

Although there are a few local banks and other financial institutions in Dadra and Nagar Haveli and Daman and Diu involved in the cryptocurrency infrastructure, since 2020, banks such as State Bank of India and HDFC Bank do allow you to transact with a regulated exchange; however, AML assurance is kept very tight. Some cooperative banks in Silvassa provide accounts to crypto businesses, but services are stripped down, zeroing in on fiat conversions. The absence of crypto-specific financial products, such as storage or investment accounts, also speaks to the RBI’s conservative approach. But the startup fintech space in the region is also looking at blockchain for supply chain and payments, which is inadvertently raising awareness about crypto.

List of Key Facts

• According to data from exchanges, the crypto trade volumes in the region are pegged at Rs 10-15 crore a year.
• We hold monthly blockchain meetups in Silvassa and typically have 50 to 70 attendees come through.
• There are no crypto startups registered in the area, according to MCA filings.
• Only 65% of the population have access to the Internet, which restricts crypto use in rural areas.
• The local police have registered 3 crypto fraud cases till 2023.

Table of Useful Information

Aspect	Details
Regulatory Authority	Reserve Bank of India, Financial Intelligence Unit
Tax Filing Deadline	July 31 annually for crypto income
Popular Wallets	MetaMask, Trust Wallet, Coinbase Wallet
Local Blockchain Events	Silvassa Tech Summit (biannual, next in April 2026)
Crypto Fraud Helpline	Daman Police Cyber Cell

Conclusion

The confusing domestic cryptocurrency environment that prevails in the rest of India is echoed in the Union Territories of Dadra and Nagar Haveli and Daman and Diu. Cryptocurrencies may be bought and sold legally but are subject to harsh tax and regulatory rules. There are few local exchange offices; popular exchanges such as WazirX and CoinDCX prevail. DeFi and NFT markets are still very niche due to lack of awareness and infrastructure. Taxing and the prudent contribution of the financial institutions drive the ecosystem, striking a balance between innovation and regulation. While much can still change in India’s crypto bill, better-defined regulations could potentially support expansion in the Union Territory, driving more users to come on board.