India Cracks Down On 25 Crypto Exchanges Over Aml Compliance Failures

What Happened

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.

India Cracks Down on Crypto Exchanges Shows Growing Compliance Trend Despite Enforcement Actions

Market Context

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 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.

India’s Dominance in Global Crypto Adoption

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.

Why It Matters

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.

Details

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.

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.

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.

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.