India’s Financial Intelligence Unit (FIU-IND) has fired a clear warning at the global crypto industry, issuing notices to 25 offshore exchanges for violating India’s anti-money laundering framework. Acting under the Prevention of Money Laundering Act (PMLA), the FIU has ordered platforms to comply or be delisted from app stores and web access in India.
This crackdown is more than a compliance exercise. With over $20 billion in daily trading volumes across these platforms, India’s move signals its intent to control one of the world’s largest retail crypto markets by forcing international players into its regulatory perimeter.
The FIU Notices: Legal Basis and Scope
The enforcement stems from Section 13 of the PMLA, which empowers authorities to demand suspicious transaction reports, verify customer records, and impose penalties of up to ₹1 lakh per violation. Parallel directives under Section 79(3)(b) of the IT Act, 2000 ordered Indian internet service providers and app stores to block access to the non-compliant platforms.
The message is unambiguous: serve Indian users without registering as a reporting entity and your platform risks being cut off.
Who’s on the Hit List?
The FIU’s 25-exchange list spans global brands, regional players, and niche offshore hubs. Among the best known:
- BingX (Singapore/Hong Kong)
- LBank (British Virgin Islands)
- CoinW (Singapore)
- Huione (Cambodia)
- CoinEx (Hong Kong)
- Remitano (Singapore)
- Paxful (US)
- CEX.IO (US/UK)
- BTCC (UK)
- Poloniex (US)
- PrimeXBT (Saint Lucia)
- BitMex (Seychelles)
- LCX (Liechtenstein)
- ProBit Global, AscendEX, Zoomex, Bitrue, CoinCola, Changelly
According to CoinMarketCap, 14 of these platforms together control over $9 billion in assets and saw about $20 billion in 24h volumes at the time of the crackdown.
For Indian traders who relied on offshore apps for better liquidity, arbitrage, or lower fees, the sudden cutoff is already causing disruption.
How PMLA Compliance Works in Practice
Since March 2023, India has required all Virtual Digital Asset Service Providers (VASPs) to register as reporting entities with FIU-IND. This applies even if the company has no physical presence in India.
Core Compliance Requirements
- KYC & Customer Due Diligence: Rigorous identity checks on users.
- Suspicious Transaction Reports: Mandatory filing with FIU.
- Record Keeping: Maintain detailed logs of client activity.
- Cybersecurity Audits: Annual certification by CERT-In empanelled auditors.
Penalty Landscape
Penalties can range from ₹10,000 to ₹1,00,000 per violation, with enforcement scaling up based on market impact.
- Binance: Fined ₹18.82 crore (largest in India so far)
- Bybit: Fined ₹9.27 crore before resuming operations
- KuCoin: Paid smaller penalties to re-enter the market
In contrast, OKX chose to exit India entirely, showing that some offshore players may not see compliance as viable.
Retail Migration
Domestic exchanges are already reaping the benefits.
- CoinDCX saw a 2,000% surge in deposits during earlier rounds of enforcement.
- Mudrex reported onboarding 10,000+ new users in weeks.
- CoinSwitch and BuyUcoin launched bonus schemes to capture migrating users (Finlaw).
OTC Liquidity at Risk
Offshore platforms have long been essential to India’s OTC desks handling large-ticket USDT/INR trades. With 25 exchanges off the table, risks include:
- Thinner liquidity pools for high-volume buyers
- Greater slippage on bulk trades
- Disrupted arbitrage between Indian and global markets
The long-term outcome may be consolidation of liquidity within FIU-registered domestic players — but at the cost of flexibility for institutions.
Vietnam – Pilot With Guardrails
Vietnam is embracing crypto under a five-year regulated pilot, starting in 2026. Features include:
- $379M minimum capital requirement for exchanges
- 49% foreign ownership cap
- Legal recognition of digital assets
- Regulatory sandboxes to test new models.
Vietnam already ranks 5th globally in adoption, with citizens holding over $100B in digital assets.
Poland – EU-Style, But Tougher
Poland’s new Crypto-Asset Market Act goes beyond the EU’s MiCA framework, introducing criminal liability, fines up to $2.8M, and even prison terms for violations. Providers get six months to comply.
The backlash from local industry shows the difficulty of balancing investor protection with innovation.
Implications for Users and Exchanges
For Indian users, the risks of sticking with offshore platforms are high: frozen withdrawals, retrospective tax liability, and zero legal recourse if funds are lost.
For exchanges, the choice is clear: register under PMLA or exit India. With 50 VASPs already on FIU’s books, the government is pushing toward a domesticated, compliant ecosystem.
But the wider picture is more complex. India’s strategy is activity-based regulation rather than a dedicated crypto law. Taxes remain punitive — 30% flat plus 1% TDS — and officials fear that granting crypto “legitimacy” could make it systemic, threatening financial stability.
Author’s Thoughts
The FIU’s crackdown on 25 offshore exchanges marks the clearest sign yet that India intends to force compliance through enforcement, not new legislation. The approach contrasts with Vietnam’s experimental openness and Poland’s hyper-strict licensing regime.
For investors, this is both good and bad: safer KYC-compliant platforms are emerging, but at the cost of choice, liquidity, and global access. For global exchanges, India is now a compliance-or-exit market — no middle ground.
In effect, India has chosen to treat crypto as a regulatory headache rather than an innovation opportunity. Whether this ensures long-term stability or simply pushes more activity underground will depend on how aggressively the FIU enforces its new playbook
