India Registers 49 Crypto Exchanges Amid Rising Money Laundering Concerns
Forty-nine cryptocurrency exchanges, most of them based in India, were registered with the country's Financial Intelligence Unit (FIU) during the 2024-25 fiscal year as part of an intensified regulatory crackdown on money laundering and terrorist financing risks in the digital asset sector. A strategic analysis of suspicious transaction reports filed by these exchanges has revealed widespread exploitation of cryptocurrency funds for serious criminal activities including illegal hawala transactions, online gambling, sophisticated scams, and even operations of an illegal adult content website.
Background and Context
The cryptocurrency landscape in India has been rapidly evolving in recent years, gaining significant attention for its potential to transform the financial sector and create wealth opportunities. However, these same characteristics—global reach, rapid settlement capabilities, peer-to-peer transaction functionality, and potential for increased anonymity—have raised serious concerns among regulators about money laundering and terrorist financing vulnerabilities. In 2023, India brought cryptocurrency exchanges under its anti-money laundering framework by designating them as reporting entities under the Prevention of Money Laundering Act (PMLA).
Key Figures and Entities
As of March 2025, 49 Virtual Digital Asset Service Providers (VDA SPs) were registered as reporting entities with the FIU, with 45 operating onshore in India and four located offshore. These exchanges are required to implement comprehensive compliance measures, including appointing designated directors and principal officers, disclosing bank and financial institution accounts, and maintaining detailed contact information with the FIU. The regulatory data shows that 28 crore rupees in penalties were imposed during FY 2024-25 against non-compliant cryptocurrency exchanges, demonstrating the government's enforcement posture.
Legal and Financial Mechanisms
Under India's regulatory framework, cryptocurrency exchanges are classified as Virtual Digital Asset Service Providers (VDA SPs) and are subject to stringent reporting obligations. These include determining and reporting beneficial ownership of cryptocurrency wallets, monitoring blockchain-based crowdfunding initiatives (similar to IPOs, known as initial coin or token offerings), and tracking transfers between hosted and un-hosted wallets. The exchanges must implement risk-based customer due diligence and enhanced due diligence protocols, conduct sanctions screening, undertake periodic risk assessments, and maintain internal audit systems. Unlike many countries where multiple agencies supervise cryptocurrency exchanges, India has designated the FIU—operating under the Union finance ministry—as the single-point authority for registration and monitoring.
International Implications and Policy Response
Strategic analysis of suspicious transaction reports has revealed significant regional concentrations of illicit crypto activities, with investigators identifying the most commonly used digital assets for illegal operations. The flagged transactions encompass not only traditional financial crimes like scams, fraud, and gambling, but also more severe offenses including child sexual abuse material distribution, terrorist financing, dark net services, and proceeds of crime. India has responded to these risks through legislative actions including the taxation of cryptocurrency transaction income and withholding taxes under the Income-Tax Act. This regulatory approach reflects growing global concern about cryptocurrency's potential to facilitate financial crime while balancing the technology's innovative potential.
Sources
This report is based on official documentation from India's Financial Intelligence Unit for the 2024-25 fiscal year, reporting requirements established under the Prevention of Money Laundering Act, and regulatory data concerning cryptocurrency exchange compliance and penalties.
