India is stepping up regulation of the crypto sector, with 49 cryptocurrency exchanges officially registered with the Financial Intelligence Unit (FIU) during the 2024–25 financial year. This move is part of the government’s effort to bring digital asset activity under stricter anti-money laundering (AML) and counter-terror financing controls, as concerns rise over crypto misuse in criminal activities.
FIU Review Reveals High-Risk Crypto Activity
According to the FIU report for the 2024–25 financial year, accessed by PTI, the registration follows a review of Suspicious Transaction Reports (STRs) submitted by crypto platforms. The FIU found that crypto funds were repeatedly used for high-risk activities, including scams, fraud, gambling networks, unaccounted transfers, and peer-to-peer abuse. Some cases were even linked to darknet services, terror financing, and child sexual abuse material, highlighting how crypto anonymity can be exploited if left unregulated.
Out of the 49 registered platforms, 45 are based in India, while four operate overseas. Unlike other countries where multiple agencies oversee crypto, India has appointed the FIU, under the Ministry of Finance, as the single authority monitoring exchanges.
Sumit Gupta, CEO of CoinDCX, said, “ The crypto market in India is far more competitive than most people think. IMO, Healthy competition is good for the ecosystem as it promotes innovation.”
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Crypto Exchanges in India Must Follow AML Rules
Crypto exchanges in India are legally classified as Virtual Digital Asset (VDA) Service Providers and have been under the Prevention of Money Laundering Act (PMLA) since 2023. Exchanges must:
- Submit Suspicious Transaction Reports (STRs)
- Identify the owners of wallets
- Track token fundraising activities like IPOs
- Monitor transfers between hosted and un-hosted wallets
After registration, exchanges also need to:
- Disclose their banking relationships
- Appoint compliance officers
- Conduct internal audits
- Follow risk-based customer checks
- Screen transactions for sanctions and perform regular risk assessments
All this information must be shared with the FIU.
FIU Enforcement and Crypto Penalties in India
The FIU actively enforces compliance. During FY 2024–25, crypto platforms failing to meet AML obligations were fined a total of ₹28 crore. The FIU also identified regional transaction hotspots and digital assets commonly linked to illicit activity, strengthening the government’s intelligence and monitoring framework.
Strengthening Crypto Regulations in India
India recognizes the potential of crypto to transform finance and wealth creation but remains cautious about the risks posed by fast transactions, global reach, and pseudonymous transfers. Alongside AML measures, the government has reinforced oversight through taxation rules and withholding tax provisions under the Income Tax Act.
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FAQs
The FIU monitors crypto exchanges, enforces AML compliance, and tracks suspicious transactions to prevent fraud, scams, and illicit activities.
Exchanges must submit suspicious activity reports, identify wallet owners, monitor transfers, conduct audits, and screen for sanctions.
India aims to curb fraud, terror financing, and scams while promoting a secure crypto ecosystem and protecting investors.
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