India seals off $9 billion in offshore cryptocurrency exchanges as the nation embarks on its most aggressive response to date against non-compliant sites.
BingX and LBank are two additional offshore exchanges blacklisted by the Financial Intelligence Unit of India (FIU-IND) for failing to adhere to anti-money laundering practices. The finance ministry affirmed that the use of such platforms through apps and sites will be closed in India.
Enforcement under the anti-money laundering law
The crackdown occurs as a result of India’s decision to apply its anti-money laundering law to digital asset service providers in 2023. The legislation requires platforms to register with the FIU-IND and report specific details. The 25 targeted exchanges, which traded billions of dollars daily, were flagged for operating outside these rules.
According to authorities, non-compliance was a threat to financial transparency. Enforcement actions have also been taken against several large platforms, including Binance, KuCoin, Coinbase, and OKX, in recent years. Some of the ones that went back into business following registration and fines were removed entirely from the market.
Partial oversight instead of full regulation
The cryptocurrency industry has been advancing at a rapid pace, but India has yet to implement a comprehensive cryptocurrency law. Instead, the government depends on partial oversight, taxation, and compliance requirements. Officials claim that systemic risks are likely to increase under direct regulation and that enforcement may be challenging.
The Reserve Bank of India continues to caution against the mainstreaming of cryptocurrencies. India has a tax rate of 30% on gains and a tax deducted at source of 1% to control activity. These steps have already decreased trading volumes on local exchanges, although the offshore exchanges continue to operate as long as they remain compliant.
Growing adoption despite restrictions
The adoption of cryptos in India is still on the increase despite the tight regulations. It is estimated that there are approximately $4.5 billion of Indian investors’ digital assets. Chainalysis has been declaring India to be the largest nation in crypto adoption over the past three years, both in terms of retail and institutional activity, as well as DeFi participation.
On-chain activity increased by almost 70% between June 2024 and June 2025, reaching a transaction volume of $2.36 trillion in the Asia-Pacific region. Japan also registered a high growth rate of 120%, which was driven by reforms and increased investor involvement.
The Indian government is considering additional plans to enhance cross-border surveillance. It aims to adopt the OECD’s Crypto Asset Reporting Framework by 2027 and sign the Multilateral Competent Authority Agreement by 2026. The system will monitor the holdings of Indian investors on foreign platforms and require them to report their trades. Experts caution that the framework can be applied retroactively, which would subject any past undeclared gains to enforcement.
Global exchanges continue to regard India as a crucial market for growth, despite the challenges. The high presence of large-scale retail, integration of fintechs, and high remittance rates make the country central to the entire cryptocurrency landscape.
