India Brings 49 Crypto Exchanges Under Anti-Money Laundering Rules While Blocking 25 Offshore Platforms

India Brings 49 Crypto Exchanges Under Strict Anti-Money Laundering Oversight

The Financial Intelligence Unit of India (FIU) has confirmed that 49 cryptocurrency exchanges are now formally regulated under the country’s anti-money laundering (AML) framework, signalling a new era of scrutiny and accountability for digital assets.

The move follows the 2023 decision to classify Virtual Digital Asset (VDA) service providers under the Prevention of Money Laundering Act (PMLA), placing crypto platforms on the same compliance footing as banks and other financial institutions.

As of 5 January 2026, 45 domestic exchanges had completed registration and undergone regulatory review, while four offshore platforms have also registered to operate legally under Indian standards.

How Crypto Transactions Are Being Tracked and Controlled

The FIU’s oversight relies heavily on Suspicious Transaction Reports (STRs) submitted by registered exchanges, providing detailed insight into how cryptocurrencies are used across India.

While regulators acknowledge the sector’s potential for investment and innovation, the report notes significant misuse.

Recurring risk areas include illegal online gambling, large-scale fraud, unregulated cross-border transfers resembling informal hawala networks, and illicit adult content platforms.

In one case, investigators traced payments across multiple digital wallets to an illegal website, demonstrating that blockchain transactions can be effectively monitored when exchanges comply with reporting requirements.

Registered platforms are now mandated to verify user identities, identify the true owners of wallets, track transfers to private wallets, and promptly report suspicious activity.

During the 2024–25 fiscal year, penalties totalling ₹28 crore ($3.1 million) were imposed on exchanges failing to meet compliance standards.

Which Offshore Platforms Are Being Blocked and Why

India’s enforcement approach has drawn a clear line between compliant and non-compliant international exchanges.

Platforms such as Binance, Coinbase, and Mudrex have registered with the FIU and continue to serve Indian users.

By contrast, 25 offshore exchanges—including BitMEX, LBank, and Phemex—have been blocked for refusing to comply with AML requirements.

Until they meet regulatory standards, Indian users are barred from accessing these services.

The FIU has further required approved platforms to appoint a local director and a principal officer responsible for direct communication with authorities.

How Penalties and Registration Shape the Market

Enforcement actions have reshaped India’s crypto landscape, funneling retail activity toward a smaller set of regulated exchanges.

Several global platforms, including Bybit and Binance, have resumed operations after completing registration and paying fines.

Bybit faced a $1 million penalty, while Binance paid $2.2 million.

Coinbase also reopened user onboarding in December, with plans for a fiat on-ramp in 2026.

The FIU has actively dismantled crypto-related scams, including Ponzi schemes promising high returns, demonstrating that strict oversight can track illicit activity while supporting legitimate trading.

What Investors Need to Know About Compliance and Costs

For users, the new rules mean more stringent KYC checks, closer monitoring of transactions, and potentially higher fees as exchanges absorb compliance costs.

At the same time, regulated platforms offer greater transparency, reducing the risk of sudden access blocks or exchange closures.

For the broader market, the framework provides clearer rules for institutional investors, fintech firms, and payment companies, laying the foundation for safer participation in India’s previously uncertain crypto ecosystem.

Is India Balancing Innovation With Control

The FIU emphasises that the goal is not to eliminate cryptocurrency, but to ensure it operates within a transparent, closely supervised system.

The agency said,

“Digital assets will remain permissible only insofar as platforms actively cooperate with regulators and uphold strict financial crime prevention standards.”

While India has made strides in bringing nearly 50 exchanges under oversight, challenges remain.

The Reserve Bank of India continues to favour central bank digital currencies over private tokens, signalling ongoing caution in the wider regulatory landscape.

The sector’s evolution is likely to continue in 2026, with attention on stablecoins, tokenisation of real-world assets, and alignment with global standards.

For now, India has drawn a clear line that crypto can operate, but only under the law.