Foreign Exchange Act 1962: How This Law Shapes Global Crypto Rules Today

When you hear Foreign Exchange Act 1962, a colonial-era law from India that gave the government power to control money moving in and out of the country. It was never meant for digital assets, but today, it’s one of the main tools used to block banks from handling crypto transactions. Countries like India and Taiwan didn’t write new crypto laws—they just used this old law to stop banks from dealing with exchanges or wallets. It’s not about Bitcoin or Ethereum. It’s about control. If money can’t flow freely through banks, crypto adoption gets stuck in the shadows.

That’s why crypto regulations, the rules that decide if you can buy, sell, or hold digital assets legally in places like India look so harsh. The 30% tax, the 1% TDS, the bank bans—all of it ties back to the Foreign Exchange Act 1962. Regulators don’t need new legislation. They just point to Section 5 or Section 10 and say, "This covers it." Meanwhile, foreign exchange control, the practice of limiting how much currency citizens can move abroad is being applied to USDT, USDC, and even BNB. If you’re using P2P trading in Bolivia or Taiwan, you’re doing it because the banks were told by this law to stay out of the game.

What’s surprising is how little has changed since 1962. The world moved from paper checks to blockchain, but the legal framework didn’t. That’s why you see posts about crypto regulations in Taiwan, Canada, and India all pointing to the same root: a 60-year-old law designed for a completely different economy. The financial compliance, the process of following government rules to prevent money laundering and capital flight you hear about today? It’s built on this foundation. Even when countries lift bans—like Bolivia did in 2024—they still have to work around it. The law doesn’t ban crypto. It bans banks from touching it. And that’s enough.

Below, you’ll find real-world examples of how this law still drives today’s crypto landscape. From seized exchanges to P2P trading surges, you’ll see how a law written for rupees and dollars is now deciding whether your crypto stays locked in a wallet—or disappears into the black market.