Cryptocurrency Exchanges in India Analyzed

Key Points

• 49 crypto exchanges registered with the FIU in India (2024-25).
• Many exchanges are based in India, with some located offshore.
• STRs revealed exploitation of crypto for scams, gambling, and fraud.
• High-risk STRs flagged CSAM, terror financing, and criminal activity.
• The FIU imposed penalties on non-compliant exchanges amounting to ₹28 crore.
• Exchanges must follow strict reporting rules and implement risk controls.

India has been closely watching cryptocurrency exchanges. The Financial Intelligence Unit (FIU) keeps track of these exchanges to prevent money laundering and the use of crypto for illegal activities. During the 2024-25 financial year, 49 exchanges were officially registered with the FIU, most of which are based in India.

These exchanges, which trade in what’s called “Virtual Digital Assets” (VDAs), are required to report any suspicious activity to the FIU. Think of it like a detective team investigating whether someone is using crypto for bad things like scams or illegal gambling.

A special look at these reports, called a “strategic analysis,” found some serious problems. The exchanges were used to carry out scams, engage in gambling, and even create fake websites. Some reports even hinted at connections to illegal activities like child sexual abuse.

Because of this, the government made rules for these exchanges. They must tell the FIU about who owns crypto wallets and how money is moving around. They also need to check if people are raising money for crypto projects through methods similar to Initial Coin Offerings (ICOs).

The FIU is like a single police officer in charge of all crypto exchanges in India. This helps make sure everyone is following the rules and protecting the country’s financial system. The FIU also fined exchanges that weren’t following the rules – a total of ₹28 crore during the last year.

The crypto world is changing fast. People are using crypto for lots of things, like making investments and sending money. However, this also brings risks. Crypto can be used to hide money and finance criminal activities because it’s easy to send money quickly around the world.

The reports showed that many suspicious activities were concentrated in certain areas and that some digital assets were frequently used in these illegal activities. These findings are important for the government to continue to protect the financial system.

“Protecting our financial system requires constant vigilance and strong collaboration in the face of evolving threats.”