India Exposes $465M in Crypto Crimes, Demands Global Regulatory Crackdown

India just dropped a bombshell on the crypto world—and regulators everywhere are listening.

The country's financial watchdog flagged a staggering $465 million in crypto-linked offenses, tracing illicit flows through everything from privacy coins to DeFi mixers. It's a forensic masterclass in following the digital money trail.

The Global Regulatory Domino Effect

This isn't just an Indian problem. The findings are a flashing red alert for every finance ministry on the planet. India's response? A blunt call for coordinated global regulation. No more regulatory arbitrage, no more safe havens—just a unified front against bad actors.

The message is clear: if one major economy tightens the screws alone, the capital just flows elsewhere. It's a classic game of whack-a-mole, played with billions in digital assets.

Building the Financial Firewall

So, what's the playbook? Think shared blacklists, real-time transaction monitoring across borders, and standardized KYC rules that actually stick. The goal is to build a financial firewall that's as borderless as the technology it aims to police.

For legitimate projects, this could be the clarity they've begged for. For the rest? The free ride might be over.

The era of 'move fast and break things' is colliding with the old-world desire to 'move securely and tax things.' One promises disruption; the other demands accountability. Guess which side just found $465 million reasons to win the argument.

India identifies $99M in unreported crypto income 

In a Lok Sabha session, Sitharaman mentioned that any regulatory framework for crypto assets can be effective only with international collaboration. This comes in line with the government’s long-standing stance on crypto assets.

India sees crypto assets with a different trajectory. It does not treat cryptocurrencies as legal tender but allows their purchase, sale, and holding as VIRTUAL Digital Assets (VDAs) under a strict tax regime. Gains are taxed at a flat 30% plus cess, while a 1% TDS applies on most transactions. These rules have eventually pushed trading activity offshore.

During the session, Sitharaman also disclosed that tax officials had identified ₹888.82 crore (approximately $99 million) in unreported cryptocurrency income during search and seizure operations. The Enforcement Directorate has attached or seized ₹4,189.89 crore (approximately $466 million) under the Prevention of Money Laundering Act (PMLA). However, the authorities have also arrested 29 individuals and filed 22 prosecution complaints.

BREAKING: 🇮🇳 Govt identified 3 crypto exchanges not following TDS rules for Indian users and uncovered:

• TDS non-compliance: ₹39.8 Cr
• Undisclosed income: ₹125.79 Cr
• Additional search & seizure haul: ₹888.82 Cr

Source: Ministry of Finance

— Crypto India (@CryptooIndia) December 8, 2025

She added that the government’s data-driven NUDGE campaign has also flagged compliance gaps. More than 44,000 notices were sent to taxpayers who traded or invested in VDAs but failed to disclose them in the dedicated tax schedule.

Coinbase reopens in India                                                                               

Officials have hinted that the regulatory vacuum is now becoming a financial-stability concern. The Reserve Bank of India (RBI) has been warning that crypto cannot be “effectively regulated” without global guardrails.

The renewed scrutiny comes as India’s crypto market shows signs of revival despite heavy taxation. The global crypto market cap surged by 2.5% over the last 24 hours. Bitcoin price managed to trade above $92,000 but saw a dip back to $91,500 zone. Meanwhile, the Fear and Greed index is still flashing “Fear” among the investors.                                                    

Adding to the momentum, Coinbase reopened registrations in India this week. The crypto exchange was forced to wind down its operations in 2023 after UPI roadblocks. However, it is now allowing crypto-to-crypto trades and plans to restore fiat on-ramps in 2026. It is waiting to secure approval from the Financial Intelligence Unit.

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