Significant Actions Against Cryptocurrency Sector
The Financial Intelligence Unit of India (FIU-IND) has taken significant action against the cryptocurrency sector by issuing compliance notices to 25 trading platforms, including notable names such as Huione, BingX, Paxful, and ProBit Global. In a statement released on October 2, the Ministry of Finance disclosed plans for these exchanges to cease accessibility to their applications and websites within the Indian market due to breaches of anti-money laundering (AML) regulations.
Impact on Trading Platforms
Data from CoinMarketCap illustrates that these 25 platforms collectively handle billions in user transactions, with 14 of these exchanges alone reporting over $22 billion in trading activity in just the last day. This crackdown aligns with India’s ongoing tightening of regulatory measures, particularly as the nation seeks to navigate the complex landscape of digital asset management without a comprehensive legal framework.
Regulatory Developments
Earlier in 2023, Indian authorities enacted regulations that brought virtual asset service providers (VASPs) under the Prevention of Money Laundering Act (PMLA) of 2002, which mandates registration with the FIU and adherence to strict reporting protocols. This shift marks a move towards partial oversight of the crypto industry, as India continues to grapple with the challenges of creating effective regulations tailored for the digital asset arena.
The Reserve Bank of India (RBI) has raised concerns about the challenges of implementing rigorous regulations, as reflected in a recent document obtained by Reuters. These regulatory hurdles, combined with a hefty 30% tax on crypto profits and an additional 1% tax on transactions, have significantly dampened local trading volumes.
Global Exchanges and Compliance
Despite the regulatory restrictions, global exchanges remain keen on the Indian market, provided they complete the necessary registration with the FIU-IND. For instance, after an infringement under the PMLA resulted in a substantial fine, Bybit has successfully resumed operations in India. Currently, over 50 exchanges have complied with FIU registration, demonstrating a trend towards increased regulatory adherence.
Nonetheless, unregistered platforms face heightened scrutiny, echoing previous enforcement actions against significant players in the sector. In recent years, prominent exchanges like Binance and Coinbase have encountered similar regulatory challenges, leading Binance and KuCoin to re-establish their services in compliance with FIU directives after earlier disruptions.
Crypto Adoption in India
Despite these rigorous regulatory measures, crypto adoption in India continues to thrive. Estimates suggest that Indian investors collectively hold around $4.5 billion in digital assets, underscoring a complex landscape where enthusiastic crypto engagement exists alongside stringent regulations designed to limit risks to the broader economic system.
On a global scale, India notably leads in cryptocurrency adoption, a position solidified by the 2025 Chainalysis Crypto Adoption Index, in which it ranks first for the third consecutive year. The country excels in areas including retail trading and decentralized finance (DeFi), with a remarkable 69% annual increase in on-chain crypto activity recorded between the previous June and the current timeframe.
Future Regulatory Frameworks
Looking ahead, India is set to implement the OECD’s Crypto-Asset Reporting Framework (CARF) by April 2027, which will ensure automatic international reporting of cryptocurrency transactions, enhancing transparency and compliance. A senior finance ministry official indicated plans to finalize the Multilateral Competent Authority Agreement (MCAA) next year, extending legal frameworks to facilitate automatic exchanges of tax information covering digital assets. This move aims to fortify the monitoring of assets held on international exchanges, ensuring that activities are tracked and reported, including transactions from past years which could trigger compliance actions from authorities.
