49 crypto exchanges now under FIU as India targets illegal fund flows

India’s regulatory grip on the crypto sector continued to tighten in 2024-25, with 49 cryptocurrency exchanges registering with the Financial Intelligence Unit (FIU) under the country’s anti money laundering framework, according to an official report accessed by PTI. A majority of these exchanges are India based, signalling a stronger push to integrate virtual asset platforms into the formal financial system.

In legal terms, cryptocurrencies are classified as Virtual Digital Assets (VDAs) , while trading platforms are referred to as VDA Service Providers (VDA SPs) . These entities were brought under the Prevention of Money Laundering Act (PMLA) reporting framework in 2023, making it mandatory for them to submit Suspicious Transaction Reports to the FIU, which functions under the Union finance ministry.

As of March 2025, 45 registered exchanges were onshore , while four operated offshore. A strategic analysis of reports filed during the financial year found that crypto assets were allegedly misused for hawala transactions, gambling, scams, fraud, and even the operation of an illegal adult content platform. Some reports also flagged red alerts related to terror financing, dark web services, child sexual abuse material, and proceeds of crime.

From an economic and financial system perspective, the report noted that unchecked misuse of crypto assets can undermine financial transparency, enable capital flight, weaken tax compliance, and pose risks to monetary and financial stability. Bringing exchanges under the PMLA framework helps protect the integrity of India’s banking system, strengthens oversight of digital fund flows, and prevents illicit money from entering the formal economy.

The FIU also identified regional concentration of suspicious activity and commonly used digital assets linked to illegal transactions. For non compliance, the agency imposed penalties amounting to Rs 28 crore during FY25.

Registered exchanges are required to disclose banking relationships, appoint designated compliance officers, conduct internal audits, follow customer due diligence norms, and carry out periodic risk assessments. The report added that India has addressed crypto related risks through regulatory oversight and taxation measures under the Income Tax Act, aiming to balance innovation with financial system stability.