India has issued formal warnings to 25 offshore cryptocurrency exchanges for ignoring anti-money-laundering rules, with authorities planning to cut off their access to Indian users. FIU-IND says the action tightens oversight of digital transfers and limits financial crime, narrowing trading choices for millions of investors while pushing foreign platforms to register under local law.
Since March 2023, every virtual asset service provider serving Indians must register as a reporting entity and comply with the Prevention of Money Laundering Act (PMLA) and full KYC checks. Data cited by FinLaw or Cryptonews indicate that the latest batch of notices turns the rule into practice, as FIU-IND has asked for domain blocks and warned of penalties for unregistered operation.
Regulatory action and compliance framework
The list of warned platforms includes Huione, Paxful, CEX.IO, and LBank alongside BingX, and authorities have indicated they plan to cut off their access to Indian users. Bybit and some other platforms have registered, while the rest risk blocking or fines.
PMLA (the Prevention of Money Laundering Act, 2002) sets out duties to detect and report suspicious transactions, forming the backbone of FIU-IND’s compliance expectations. Cryptocurrencies remain outside legal tender status, but the Government maintains a cautious line between adoption and control as registration requirements are enforced.
The enforcement drive narrows investor options but channels activity toward registered venues, with FinLaw-cited analyses noting a shift in trading volume that may speed market consolidation and lift operational standards for any exchange seeking to stay in India. Domestic exchanges could see increased volume and sharper competition, pushing upgrades in infrastructure and compliance.
Practical results of the FIU-IND drive include changes in adoption, liquidity, risk, and institutional interest. Users losing access to blocked offshore sites may open accounts on registered platforms, moving liquidity to regulated order books. Domestic exchanges receive extra volume and face heightened rivalry, which pressures them to improve systems and compliance.
Tighter rules reduce the chance of money laundering but raise operating costs for providers and customers. FinLaw reports that clearer rules could draw custody services or blockchain development projects.
The Government may release a policy paper outlining a long-term stance on digital assets. Until then, FIU-IND registration will determine which exchanges can continue serving India, according to the cited reports.
In practical terms, the crackdown aims to curb financial crime while steering crypto activity into regulated channels, signaling that continued market access will depend on strict adherence to FIU-IND registration, PMLA obligations, and full KYC compliance.
