India has taken a strong step against offshore cryptocurrency exchanges that fail to follow its anti-money laundering rules. On October 2, 2025, the Financial Intelligence Unit of India (FIU-IND) issued notices to 25 offshore crypto service providers. This move signals India’s firm stance on compliance and transparency in the digital asset market.
The notices target foreign platforms that offer services to Indian users without following the rules laid down under the Prevention of Money Laundering Act (PMLA). The action shows India’s determination to protect investors, prevent illegal activities, and strengthen oversight of the fast-growing crypto sector.
Why FIU Took Action
The FIU acts as the central national agency responsible for collecting, analyzing, and sharing information on suspicious financial transactions. It plays a critical role in India’s fight against money laundering, terror financing, and economic crimes.
Over the past two years, crypto adoption in India has grown rapidly. Reports from Chainalysis and other research agencies show India ranks among the top countries in global crypto adoption. Millions of Indians use centralized and decentralized crypto services every day. This rapid rise has also created risks.
Offshore exchanges that do not register with Indian authorities allow transactions to flow without proper monitoring. This creates loopholes for money laundering, tax evasion, and fraud. FIU officials found that several popular offshore exchanges continued to operate in India without reporting suspicious transactions or following KYC (Know Your Customer) rules.
By issuing notices, FIU has made it clear: if you want to serve Indian users, you must follow Indian laws.
Which Exchanges Face Action
While FIU has not revealed the complete list in public, media reports indicate that the notices cover both well-known global platforms and mid-size offshore players. The list includes exchanges like Huione, CEX.IO, BingX, and others that cater to Indian users through apps, websites, or peer-to-peer networks.
These platforms failed to:
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Register as reporting entities with FIU
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Maintain proper KYC checks for Indian customers
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Submit Suspicious Transaction Reports (STRs)
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Share data on large cross-border crypto transfers
The government has warned that if these exchanges do not comply, regulators may block their apps and websites in India.
India’s Crypto Regulation Journey
India’s approach to crypto has moved from uncertainty to structured regulation in recent years.
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In 2022, the government imposed a 30% tax on crypto profits and a 1% TDS on transactions, which slowed trading volumes but increased monitoring.
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In 2023, India made it compulsory for Virtual Digital Asset Service Providers (VASPs) to register with the FIU under PMLA.
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In 2024, the government aligned its rules with Financial Action Task Force (FATF) guidelines, which stress strict KYC and anti-money laundering frameworks.
Despite these measures, many offshore exchanges ignored the requirement to register. Indian investors continued to use them to avoid high taxes and strict monitoring. This created a parallel grey market, which FIU is now trying to shut down.
How This Impacts Indian Investors
For Indian crypto users, this crackdown could have both short-term challenges and long-term benefits.
Short-Term Challenges:
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Investors who hold assets on non-compliant exchanges may face restrictions or withdrawal delays.
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Offshore platforms may suspend new registrations for Indian users.
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Prices on domestic exchanges could temporarily rise as liquidity shifts.
Long-Term Benefits:
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Indian investors will gain stronger protection as exchanges comply with reporting norms.
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KYC enforcement will reduce fraud and scams.
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A level playing field will emerge, where compliant Indian exchanges compete fairly.
Essentially, FIU’s action aims to protect investors and secure India’s financial system, even if it causes short-term inconvenience.
Global Context
India is not acting alone. Governments worldwide have tightened rules on offshore crypto platforms.
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The United States has sued multiple global exchanges for violating securities and money laundering laws.
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The European Union’s MiCA regulation sets strict guidelines for crypto businesses serving EU citizens.
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Countries in Asia and the Middle East also demand local registration and reporting.
By issuing these notices, India aligns itself with global efforts to ensure accountability in the crypto industry.
Industry Reactions
The crackdown has triggered mixed reactions in the crypto ecosystem.
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Domestic Exchanges: Indian platforms like WazirX, CoinDCX, and ZebPay welcomed the move. They argue that foreign competitors enjoy an unfair advantage by avoiding compliance and taxes. This action, they say, will create fair competition.
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Offshore Platforms: Some offshore exchanges have expressed willingness to cooperate and register with FIU. Others argue that India’s high taxes push users offshore, and unless tax rules ease, investors will continue to seek alternatives.
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Investors: Reactions from retail investors remain divided. Some worry about losing access to global platforms with advanced features and better liquidity. Others see this as a step toward a safer and more transparent environment.
What Happens Next
The FIU has set clear deadlines for offshore platforms to respond to the notices. If exchanges fail to comply:
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Their websites and mobile apps may be blocked in India.
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Payment gateways and banking channels may cut off access.
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The government could impose penalties or recommend prosecution under PMLA.
If exchanges choose to comply:
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They will need to register as reporting entities.
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They must implement strong KYC processes.
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They will have to report suspicious and large-value transactions regularly.
This compliance will make offshore exchanges subject to the same rules as Indian platforms.
The Road Ahead for India’s Crypto Market
India sits at a turning point in its crypto journey. The FIU crackdown highlights the government’s determination to control the sector without banning it.
Over the next year, three major developments may take shape:
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Greater Compliance: More global exchanges may register with FIU to retain access to the Indian market.
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Tax Reforms: The government may review the high tax structure if it wants to discourage the grey market.
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CBDC Integration: The Reserve Bank of India (RBI) is testing the digital rupee. As CBDC adoption rises, regulators will push for tighter integration of crypto transactions with the official system.
If India balances strict oversight with supportive reforms, it can emerge as a global hub for regulated digital assets.
Conclusion
The FIU’s notices to 25 offshore crypto exchanges mark a decisive moment in India’s crypto regulation story. The action sends a clear message: India welcomes innovation, but not at the cost of financial security or compliance.
For investors, this is both a warning and a safeguard. The era of using unregulated offshore platforms without consequences is ending. In its place, a more transparent, compliant, and secure ecosystem is set to grow.
India has shown that it will not sit idle while money laundering, tax evasion, or regulatory evasion threatens its financial system. Offshore exchanges must now make a choice: follow the rules or exit the Indian market.
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