India's financial watchdog, the Financial Intelligence Unit-India (FIU-IND), has initiated a significant regulatory crackdown, issuing non-compliance notices to 25 offshore cryptocurrency exchanges. These exchanges are accused of failing to register and adhere to the nation's stringent Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) obligations, as mandated under the Prevention of Money Laundering Act (PMLA). As a direct consequence of this non-compliance, the regulator has ordered the immediate withdrawal of these exchanges' websites and mobile applications from public access within India.

Among the 25 targeted platforms, data from CoinMarketCap reveals that at least 14, including prominent names like BingX, LBank, CoinW, ProBit Global, BTCC, AscendEX, Zoomex, and Poloniex, collectively manage over $9 billion in assets and recorded approximately $20 billion in trading volume within the past 24 hours. While these affected exchanges have yet to issue public statements regarding the notices, the regulatory action highlights a clear shift in India's approach to the burgeoning digital asset market.

This widespread enforcement action is rooted in a crucial policy change enacted in March 2023. At that time, India's Finance Ministry declared that all Virtual Asset Service Providers (VASPs), encompassing cryptocurrency exchanges, would fall under the purview of the PMLA, 2002. This mandate specifically requires any exchange serving Indian users, irrespective of its physical location, to register with the FIU-IND and comply with its rigorous reporting and compliance standards. To date, approximately 50 crypto exchanges have successfully registered with the anti-money laundering agency, demonstrating a path to legal operation within the country.

The FIU-IND has a history of targeting major global players in the crypto space. In the past, platforms such as OKX opted to exit the Indian market following initial regulatory pressure. However, other industry heavyweights, including Binance, Coinbase, and KuCoin, have subsequently reversed their stance, undertaking the necessary steps to register with the FIU-IND in recent months. This registration allows them to become compliant and legally resume their operations. For instance, Binance officially relaunched its services in India in August 2024, and Coinbase re-entered the country earlier this year, introducing an early-access program for pre-signed users.

This massive regulatory move by India's FIU-IND should not be viewed as an an attack on the cryptocurrency industry itself, but rather as a forceful declaration that the era of unregulated operations is decisively over. By compelling these offshore platforms, which oversee billions in assets, to either comply or face blocking, India is sending an unequivocal message: legal participation is the only route to market access. The core reason for targeting these exchanges is their failure to register as "reporting entities" under the PMLA, a requirement that has been in effect since March 2023 and mandates strict Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures for all platforms, domestic or foreign, serving Indian customers.

The crackdown fundamentally reshapes India’s digital asset market, ushering in a new reality where compliance is synonymous with market access. This action provides a significant advantage to the roughly 50 exchanges that have already registered with the FIU-IND. As non-compliant platforms are shut down or blocked, their user base and trading volumes are expected to migrate to legal, compliant alternatives. This influx will enhance the market share, increase deposits, and bolster the overall legitimacy of platforms like CoinDCX, WazirX, and the re-registered Binance and Coinbase, establishing compliance as a paramount competitive advantage in the Indian market.

For the average Indian crypto investor, these developments are a positive step towards a more secure and transparent ecosystem. By mandating robust KYC protocols and stringent record-keeping, the government aims to significantly reduce the risks of investors falling prey to scams, experiencing hacks, or unknowingly having their funds implicated in illicit activities. Consequently, utilizing an unregistered exchange now poses considerable risks to one's financial assets and legal standing, potentially leading to complications, particularly concerning India’s high crypto tax laws. Moving forward, any global crypto company aspiring to tap into India's vast market must now prioritize paying any necessary penalties and achieving full PMLA compliance as the singular viable pathway.