EU Investor Diligence for an Indian Blockchain Infrastructure Company

An EU investor looking at an Indian blockchain infrastructure company should start by separating the company from the protocol story. The investee may write software, operate nodes, maintain validator tooling, hold token incentives, support wallets or serve an overseas group that faces EU customers. Each version creates a different diligence file.

The commercial question is not whether the target uses blockchain. It is whether the Indian company owns the technology, can receive the investment, can perform the promised services, and has a governance model that survives regulatory and treasury scrutiny after closing.

Start With The Investment Route Into India

The first workstream is the Indian issuer, instrument and ownership route. RBI's official Master Direction on Foreign Investment in India explains that foreign investment is governed through FEMA, the non-debt instruments framework and related reporting rules. An EU fund should test whether the proposed shares, convertible instruments, secondary transfers, pricing, beneficial ownership and post-closing reporting are aligned before term-sheet economics become fixed.

The company file should also support the round under the Companies Act, 2013. Board approvals, shareholder consents, articles, prior investor rights, ESOP documents and register records should match the proposed investment. In Web3 diligence, corporate defects often become more expensive because control may also sit in repositories, wallets, foundations or offshore service entities.

Test Whether EU-Facing Activity Changes The Risk

An EU investor should identify whether the Indian target merely builds infrastructure for others or directly touches EU users, issuers, exchanges, wallets, staking, custody, transfer, order routing or token promotion. EU exposure can matter even where the target is in India, because commercial plans may depend on selling into Europe.

ESMA's MiCA overview describes the EU framework as covering transparency, authorisation and supervision for relevant crypto-asset activity. ESMA also maintains MiCA databases and registers, including information on crypto-asset white papers and authorised crypto-asset service providers. If the Indian company supports an EU crypto-asset service provider, the diligence should explain which entity is authorised, which entity performs technical services, and whether outsourcing or delegation creates a gap.

This does not mean every infrastructure vendor is a regulated EU provider. It means the file should map the activity, client base, revenue model and control rights.

Map The Indian VDA And Tax Perimeter

India-side Web3 diligence should be factual. The investor should request a product map showing tokens, wallets, treasury assets, validator rewards, customer geographies, fiat rails, exchange integrations, custody arrangements, admin keys and affiliate contracts.

FIU-IND's downloads page lists the AML and CFT Guidelines for Reporting Entities Providing Services Related to Virtual Digital Assets updated as on 8 January 2026. The target may or may not be a reporting entity on the facts, but the diligence should include a written classification note rather than an assumption. Where stablecoins or token categories are central to the plan, the EBA's MiCA materials on asset-referenced and e-money tokens should also be checked.

For investors, the useful output is a risk register: what the Indian company does today, what it plans to do after funding, which activities need separate advice, and which conditions belong in the transaction documents.

Review IP, Code And Treasury Control Together

Blockchain infrastructure value often depends on code quality, repository control, open-source use, smart-contract audits, security remediation, brand ownership and inter-company licences. A cap-table review will miss the main asset risk if it does not trace these materials.

The investor should confirm that founders, employees and contractors assigned relevant IP to the correct entity; repositories and deployment credentials are company-controlled; open-source dependencies have been reviewed; and audit reports were followed by documented fixes. If protocol governance, token rewards or validator operations are central to revenue, the file should identify who can move assets, approve upgrades, change fee logic, pause services or respond to incidents.

Treasury governance should be investor-readable. Wallet authority, multi-signature controls, reserve policies, affiliate holdings, token allocation records and reporting covenants should sit beside the legal documents, not in a separate technical channel that deal counsel never sees.

Typical Timeline And Cost Range

A focused red-flag review for one Indian blockchain infrastructure company can often be completed in 2 to 3 weeks after the investor receives the cap table, constitutional documents, product map, IP records, repository and audit materials, token or treasury documents, customer contracts and EU-facing activity description.

A more complex review involving an EU-regulated partner, token issuance, custody, validator rewards, multi-entity treasury or strategic control rights usually needs a staged 4 to 6 week process with India counsel, EU regulatory input and technical coordination.

Common Mistakes

1. Reviewing the Indian company without tracing protocol value. The important rights may sit in code repositories, wallets, token documents or affiliate contracts.
2. Assuming infrastructure has no regulatory perimeter. Node, wallet, custody, transfer, staking or exchange support can change the analysis depending on facts.
3. Leaving treasury controls outside transaction documents. Investor rights are weak if token movements, admin keys and incident reporting are treated as informal operations.

How KAS & Co. Can Help

KAS & Co. helps EU investors, strategic acquirers and India-linked blockchain teams review inbound investment routes, Web3 operating models, IP ownership, treasury governance and transaction protections for Indian technology companies. For an India-EU blockchain infrastructure diligence review, contact KAS & Co..

FAQs

1. Does an EU investment in an Indian blockchain infrastructure company need special Indian approval?

Not automatically. The answer depends on the investor, instrument, sector activity, ownership position, pricing, beneficial ownership and reporting route.

2. Why does MiCA matter if the target company is incorporated in India?

MiCA may matter where the business model depends on EU users, EU-authorised partners, crypto-asset services, token issuance, outsourcing or EU-facing commercial activity.

3. Should a software-only blockchain company still prepare a VDA classification note?

Yes. A short written note can show whether the company is only providing software or also performing wallet, transfer, custody, exchange, token or treasury functions.

4. What documents should an EU investor request first?

Start with the entity chart, cap table, investment instrument, constitutional documents, IP assignments, repository records, audit reports, token and treasury materials, customer contracts and activity map.

Sources

• Reserve Bank of India - Master Direction: Foreign Investment in India
• Companies Act, 2013 - India Code
• FIU-IND - VDA service provider guidance and registration circulars
• ESMA - Markets in Crypto-Assets Regulation
• ESMA - Databases and Registers
• European Banking Authority - Asset-referenced and e-money tokens under MiCA