India brings 49 crypto exchanges under anti-money laundering law

In its 2024–2025 annual report, India’s Financial Intelligence Unit (FIU-IND) confirmed that 49 cryptocurrency exchanges are now required to follow anti-money laundering (AML) rules under the country’s laws.

This follows India’s 2023 decision to bring Virtual Digital Asset (VDA) service providers under the Prevention of Money Laundering Act (PMLA), subjecting crypto exchanges to the same standards as banks and other financial institutions.

According to the FIU report, on 5 January 2026, forty-five of those exchanges that are actually registered in India had completed the process in the country and undergone local review.

There are also four platforms operating from outside India that have undergone the registration process. They are now expected to report transactions, identify clients, and report suspicious behavior to Indian authorities.

The government of India is closely monitoring the cryptocurrency market, and every platform operating in the country must take active steps to prevent financial crimes.

FIU flags criminal crypto use through transaction monitoring

The central analysis of the FIU report is based on Suspicious Transaction Reports (STRs) submitted by registered exchanges. These reports provide the government with the exact information required to understand how cryptocurrency is being used and abused.

According to the FIU, cryptocurrency serves as a tool for promoting innovation, investment, and financial inclusion. However, the bad largely outweighs the good.

This report also highlights several high-risk activities associated with cryptocurrency use, including money transfers reminiscent of the informal exchange system in countries bordering India and Pakistan, online illegal gambling, organized large-scale criminal fraud cases, and adult content platforms that are clearly unlawful.

In one case, researchers traced the movements of the cryptocurrency payments through digital wallets to an illegal adult website. This is a concrete example of how blockchain transactions, when properly managed, can be tracked and thus verified.

For example, under the current rules, registered exchanges must adhere to specific procedural standards, including identity verification of users, identification of the actual owners of crypto wallets, tracking transfers from exchange-based wallets to private wallets, and reporting suspicious behavior to the FIU. 

There are consequences for non-compliance. FIU, in this regard, levied penalties on crypto platforms that did not meet compliance standards in the previous fiscal year. 

India blocks offshore exchanges as crypto oversight tightens

There’s also an obvious division in India’s crypto market between those that comply with the law and those that don’t. Binance, Coinbase, and Mudrex — major offshore entities that have registered with the FIU — are approved for India. 

However, other foreign stations refused to register, prompting the FIU to disconnect 25 offshore cryptocurrency exchanges that failed to comply with India’s AML policies. They are stations such as BitMEX, Lbank, and Phemex. 

Indian users are barred from using these platforms until they register and report the transactions. Such an enforcement action has sharply diverted India’s retail crypto trading into a narrow orbit of regulated exchanges. These platforms are then required to appoint a director and a principal officer, who is responsible for communicating with government agencies.

The executive committee said it didn’t want to close all windows on digital assets. Instead, it pledged that cryptocurrency could only be traded under transparent law systems where close supervision was maintained.

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