India Intensifies Regulatory Scrutiny on Crypto Exchanges
India’s Financial Intelligence Unit (FIU-IND) has escalated enforcement against offshore cryptocurrency exchanges, issuing formal notices to 25 platforms for failing to register and comply with anti-money laundering (AML) regulations. The list includes prominent exchanges such as BingX, LBank, CoinW, ProBit Global, BTCC, AscendEX, Zoomex, and Poloniex. The Indian finance ministry announced the move on Wednesday, underscoring the government’s determination to regulate virtual asset service providers effectively.
Significant Market Presence Despite Compliance Failures
Among these 25 exchanges, 14 collectively hold assets exceeding $9 billion and recorded close to $20 billion in trading volume over the last 24 hours, according to CoinMarketCap data. Despite regulatory orders to remove their websites and apps from Indian users, most platforms remain accessible at the time of reporting. Requests for comments from BingX, LBank, CoinW, and ProBit Global were not returned.
India’s Regulatory Framework for Crypto Exchanges
India does not yet have a dedicated cryptocurrency regulatory framework. However, since March 2023, the finance ministry has mandated that virtual asset service providers must register with the FIU-IND under the Prevention of Money Laundering Act (PMLA) of 2002. This requires exchanges to adhere to strict reporting and compliance obligations aimed at curbing illicit financial activities. To date, at least 50 exchanges have complied with the registration requirement. The FIU-IND has previously taken enforcement actions against major global platforms such as Binance, Coinbase, KuCoin, and OKX. Notably, OKX exited the Indian market last year, while Binance, Coinbase, and KuCoin have completed registrations recently to resume operations in India. Binance officially restarted its India operations in August 2024. Coinbase also re-entered the market earlier this year and has begun an early-access program for Indian users, although full services are still pending launch.
FinOracleAI — Market View
India’s regulatory crackdown on non-compliant crypto exchanges signals a decisive shift towards tightening oversight in the virtual asset sector. The government’s insistence on AML compliance aims to mitigate risks related to illicit finance and enhance investor protection.
- Opportunity: Increased regulatory clarity may foster trust and attract institutional participation in India’s crypto market.
- Risk: Enforcement actions could disrupt liquidity and trading volumes if major offshore exchanges cease operations or delay compliance.
- Opportunity: Registered exchanges like Binance and Coinbase stand to gain market share as compliance barriers rise.
- Risk: Continued accessibility of non-compliant platforms poses enforcement challenges and potential regulatory loopholes.
Impact: The enforcement drive is likely to accelerate formalization of India’s crypto ecosystem, benefiting compliant operators while pressuring non-registered exchanges to either comply or exit the market.
