India’s FIU issues compliance notices to 25 offshore crypto firms for AML breaches, intensifying regulation and reshaping India’s digital asset market.
India has intensified regulatory action in the digital asset sector, with the Financial Intelligence Unit (FIU-IND) serving compliance notices to 25 offshore crypto platforms. The move, made on Thursday, reflects the government’s growing determination to enforce anti-money laundering laws and protect domestic investors from unscrupulous operators.
Offshore Firms Face AML Heat in India
The FIU sanctioned that the notices were issued under Section 13 of the Prevention of Money Laundering Act (PMLA). The section gives regulators the authority to examine company records, confirm customer information, and request reports on suspicious transactions. They can result in a fine of up to Rs 1 lakh for each breach.
Available trading pairs include CEX.IO, BTCC, Changelly, Paxful, Poloniex, BitMex, LCX, CoinW, and Huione. These websites and companies were also ordered to be taken down in India, which removed access to the public. This is one of the biggest enforcement actions by the FIU against offshore operators.
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India has made a proposal to register all virtual digital asset (VDA) service providers with the FIU as reporting entities. The law applies to exchanges providing crypto-fiat transfers, token transfers, custody or any service pertaining to the control of assets. Registered companies also have reporting and record-keeping requirements under the PMLA regime.
India’s crypto regulatory framework is still stringent, with compliance and taxation being the key themes. The government has already levied a 30% tax on capital gains and 1% tax differential at source on all crypto transactions. These policies have shrunk the local trading volumes, which in turn has led some investors to seek offshore platforms.
Despite these issues, adoption continues to grow. India topped the Chainalysis Global Crypto Adoption Index 2025. On-chain activity increased 69% year-on-year while transaction volumes went from $1.4 trillion to $2.36 trillion. This shows the country’s paradox of strong demand but under severe restrictions.
Binance and KuCoin Return Following Enforcement Settlements
Some exchanges have already made changes. Bybit, which has since been re-set up, paid fines and registered with the FIU. Binance and KuCoin were also the targets of enforcement actions but returned to business after paying off. Analysts believe that compliance, while expensive, has evolved (if not imposed) itself as the only way of accessing the Indian market for foreign firms.
Commentators say India’s crackdown is indicative of broader international trends of regulatory tightening. The offshore exchange that does not register locally is becoming increasingly recognized as one of the weak spots in the world financial system. By enforcing stringent oversight, authorities strive to deter money laundering and safeguard users.
The recent FIU action highlights the risk for companies for failing to fulfill obligations. Analysts warn that smaller platforms may not be able to survive increasing legal costs and pressure to retool their services. This could force smaller operators into liquidation, and allow larger, better capitalised players to take share.
India’s position underscores the impact of regulation on the future of crypto markets. With adoption robust but oversight increased, compliance will be the key factor in sorting out what platforms survive and which fall under the pressure to exit.
