India has significantly stepped up regulatory oversight of its cryptocurrency sector, with 49 crypto exchanges formally registering with the country’s Financial Intelligence Unit (FIU-IND) during the 2024–25 financial year as part of a wider effort to bring digital asset trading under stricter anti-money-laundering and counter-terror financing controls.
According to the FIU-IND’s report, 45 of the registered platforms are domestic exchanges, while four are offshore operations that agreed to comply with India’s regulatory framework to continue serving Indian users. Under Indian law, specifically the Prevention of Money Laundering Act (PMLA), 2002, virtual digital asset (VDA) service providers such as crypto exchanges must register as “reporting entities,” implement comprehensive customer verification processes and submit detailed financial transaction reports to regulators.
The registration initiative reflects India’s broader strategy to integrate cryptocurrency markets into its formal financial supervision system after several years of regulatory ambiguity. FIU-IND’s expanded role means that crypto exchanges will now operate under anti-money-laundering (AML) and suspicious transaction reporting requirements similar to those applied to banks and other financial institutions. Regulators have also imposed penalties totaling roughly INR 2.8 billion (about $3.1 million) on exchanges that failed to comply with AML rules and registration obligations during the same period.
Under the updated oversight regime, registered exchanges are now required to carry out Know Your Customer (KYC) checks, monitor transactions for suspicious activity, and file Suspicious Transaction Reports (STRs) with the FIU. This includes enhanced due-diligence standards and ongoing risk assessments. Exchanges also must maintain detailed records of customer identities, wallet ownership information, and transactional data for regulatory review, typically for several years.
India’s regulatory emphasis on oversight follows strategic analysis of STRs showing that digital assets have at times been exploited for illicit purposes. Authorities flagged patterns related to hawala transactions, scams, fraud, gambling networks and other high-risk activities in past reporting, highlighting why tighter compliance and monitoring are now central to the government’s approach.
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The FIU-IND’s move has also affected offshore platforms that previously operated in India without oversight. In late 2025, regulators blocked access to around 25 foreign crypto exchanges that did not meet Indian AML and reporting requirements, preventing them from serving users in the country until they obtained proper registration. Some major global exchanges, including Binance, Coinbase and Mudrex, have since completed registration and regained market access.
For Indian retail traders and broader market participants, the regulatory shake-up has mixed implications. On one hand, tighter compliance and clearer rules may enhance trust in regulated platforms and reduce the risk of fraud or service outages tied to unregistered operators. On the other hand, some users may see fewer available choices, particularly as smaller or non-registered exchanges are excluded from the market or blocked from operating.
Industry observers say India’s approach is part of a global trend in which countries are trying to balance innovation in digital finance with efforts to safeguard financial systems and protect consumers. The focus on AML compliance, transaction transparency and enforcement of reporting requirements could help pave the way for more institutional participation, albeit at the cost of increased operational burdens for exchanges.
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