Cancellation: India’s Financial Intelligence Unit (FIU) Tightens Rules for Crypto Exchanges

Key Points India has officially registered 49 cryptocurrency exchanges under the Financial Intelligence Unit (FIU), tightening anti–money laundering (AML) rules to combat fraud, scams, and terrorism financing within the crypto sector. Crypto platforms have already faced 28 million INR in penalties as India enforces strict compliance obligations such as wallet monitoring, AML reporting, and risk assessments to strengthen market oversight.

India sharpens regulation of the crypto sector India is ramping up regulatory oversight of digital assets. During fiscal year 2024–2025, 49 crypto exchanges were formally registered with the FIU, marking a major step in the government’s effort to strengthen AML and counter-terrorism financing (CFT) controls as concerns grow over misuse of cryptocurrencies for illicit activities.

FIU review reveals high-risk crypto activity According to FIU’s annual report for FY 2024–25, accessed by PTI, the registrations followed an extensive review of Suspicious Transaction Reports (STRs) submitted by crypto platforms. The FIU discovered that crypto assets were repeatedly used for high-risk and criminal activities, including: fraud and financial scamsonline gambling and unreported transfersmisuse between usersincidents linked to darknet servicesterrorism financingcirculation of child sexual abuse material The findings highlight how easily crypto anonymity can be exploited without strict oversight. Out of the 49 registered platforms, 45 are based in India, while four operate from abroad. Unlike countries where multiple regulators oversee crypto, India has designated a single authority — the FIU under the Ministry of Finance — to monitor exchanges. CoinDCX CEO Sumit Gupta commented: “India’s crypto market is far more competitive than most people realize. Healthy competition is good for the ecosystem because it drives innovation.”

Crypto exchanges must comply with strict AML obligations Under Indian law, cryptocurrency exchanges are classified as Virtual Digital Asset (VDA) service providers and, since 2023, fall under the Prevention of Money Laundering Act (PMLA). They are required to: AML Compliance Requirements file Suspicious Transaction Reports (STR)identify wallet ownersmonitor token fundraising activities (such as IPO-style token offerings)track transfers between hosted and unhosted wallets Post-registration obligations Exchanges must also: disclose their banking relationshipsappoint compliance officersperform internal auditsimplement risk-based customer controlsscreen transactions against sanctions listscomplete regular risk assessments and share all data with the FIU These requirements create a comprehensive surveillance framework for detecting suspicious activities in the crypto ecosystem.

FIU enforcement and penalties: India cracks down The FIU has actively enforced these rules. During FY 2024–2025, crypto exchanges that failed to meet AML obligations were fined a combined 28 million INR. The FIU also identified regional hotspots for suspicious crypto activity and mapped digital assets frequently involved in illegal transactions — strengthening India’s national intelligence and monitoring framework.

India strengthens its regulatory stance India recognizes the potential of cryptocurrencies to transform finance and wealth creation. However, authorities remain cautious due to the rapid speed, global reach, and pseudonymous nature of crypto transactions, which pose significant risks. In addition to AML rules, the government has intensified oversight through: stricter tax policieswithholding tax (TDS) requirementsFIU-led monitoring India’s approach is clear: support innovation but prevent misuse of digital assets for crime.

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