India Cracks Down on 25 Crypto Exchanges Over AML Compliance Failures

India cracked down on crypto exchanges as the Financial Intelligence Unit-India (FIU-IND) issued notices to 25 platforms, including Huione, BingX, Paxful, LBank, CoinW, and ProBit Global, over violations of anti-money laundering (AML) compliance rules.

In an October 2 official release, the finance ministry confirmed that the regulator has also ordered these crypto exchanges to withdraw their apps and websites from public access in India.

According to CoinMarketCap data, the 25 affected exchanges together manage billions in user assets, with 14 of them collectively generating over $22 billion in trading volume within the past 24 hours.

India’s AML enforcement against offshore crypto platforms comes amid a tightening policy stance.

Though India has no comprehensive digital asset framework, the finance ministry in March 2023 brought virtual asset service providers (VASPs) under the Prevention of Money Laundering Act (PMLA), 2002, mandating FIU registration and reporting requirements.

The country is leaning against comprehensive crypto legislation, opting for partial oversight instead.

A document prepared last month and reported by Reuters showed that the Reserve Bank of India (RBI) argued that effective regulation would be difficult.

India has also relied on heavy taxation and compliance requirements to contain crypto activity. A 30% tax on profits and a 1% tax deducted at source on transactions have sharply reduced domestic trading volumes.

Starting July 7, 2025, an 18% GST will be added to crypto trading and service fees, including futures, spot, and copy trading.

-> This is on top of the 30% tax on profits and 1% TDS per transaction

-> GST will show up separately in your bills

India now has one of the… pic.twitter.com/eaNSEMhdVY

However, global exchanges are permitted to operate if registered with the Financial Intelligence Unit-India, as seen when Bybit resumed services after paying a 9.27 crore rupees ($1.06 million) penalty for violating the Prevention of Money Laundering Act (PMLA).

The regulator noted that over 50 crypto exchanges have registered with FIU-IND, indicating rising compliance.

Yet unregistered platforms face increasing scrutiny, following earlier actions against major industry players.

In 2023 and 2024, Binance, Coinbase, KuCoin, and OKX all faced similar enforcement actions.

OKX ultimately left India, while others registered with the FIU to restart local operations.

Several exchanges experienced URL blocks and app store removals until paying fines and registering locally. Binance and KuCoin later resumed operations after satisfying these requirements, though the regulatory environment remains strict.

Crypto adoption persists despite these restrictions.

Officials estimate Indians hold approximately $4.5 billion in digital assets, with constrained adoption and tight regulations helping limit risks to the broader financial system.

Offshore crypto exchanges continue to pursue Indian operations for good reason.

The 2025 Chainalysis Crypto Adoption Index places India first globally for crypto adoption for the third consecutive year, topping centralized retail, institutional activity, DeFi, and decentralized services.

In the 12 months through June 2025, India led on-chain crypto activity with a 69% year-over-year rise in value received.

Total crypto transaction volume across India and the APAC-dominated market jumped from $1.4 trillion to $2.36 trillion.

These factors drive crypto exchanges to pursue the Indian market, requiring them to satisfy regulatory demands for operation.

In a separate development, India plans to implement the OECD’s Crypto-Asset Reporting Framework (CARF) by April 2027, allowing automatic global reporting of crypto transactions for enhanced compliance and transparency.

A senior finance ministry official stated that the country expects to sign the Multilateral Competent Authority Agreement (MCAA) next year.

This agreement will establish the legal structure for automatic tax information exchange.

India will enable automatic crypto transaction data sharing, tighter compliance and better regulatory transparency by adopting the OECD’s CARF rules.#IndiaCrypto #CARF #CryptoReprotinghttps://t.co/B3lV1onpcH

India joined the MCAA in 2015 for financial account data; the forthcoming agreement extends coverage to digital assets.

The global crypto reporting system means investors’ coins held on overseas exchanges will be tracked, and offshore centralized exchange (CEX) trades will be reported.

According to the tax firm, once the system is live, the reporting will be done not just for the current year but for past years as well, adding that authorities can issue notices under various sections for previously undisclosed income.

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