India’s Crypto Crackdown: 49 Exchanges Registered, ₹2.8 Billion in Penalties Imposed

Regulation hits the subcontinent—hard. India's financial watchdogs just dropped the hammer, formalizing oversight in a market that's been dancing in the gray zone for years.

The Compliance Toll

Forget the wild west. The government's ledger now shows 49 crypto exchanges officially on the books. That's 49 entities pulled into the light, forced to play by a new set of rules. The cost of doing business? A staggering ₹2.8 billion collected in penalties—a clear signal that playing fast and loose with compliance is no longer an option. It's a massive revenue line for the authorities, proving that even in decentralized finance, the taxman always finds a way.

A New Era for Indian Crypto

This isn't just paperwork. It's a fundamental shift. Registration means accountability, KYC protocols, and transaction monitoring. It strips away the anonymity that once defined the space. For legitimate operators, it's a path to legitimacy. For the rest, it's an existential threat. The market is being forcibly matured, separating the builders from the opportunists.

The Ripple Effect

Expect global exchanges eyeing India's massive user base to recalibrate their strategies. The entry fee just got a lot steeper. Local traders, meanwhile, face a new reality: their preferred platforms are now direct extensions of the financial system they sought to bypass. The irony is thick enough to trade as a futures contract.

One step toward clarity, another toward control. The Indian crypto scene just got its report card—and the price of admission went up. As always in finance, the biggest profits often go to the house setting the rules.

Suspicious Transactions Draw Strategic Attention

According to the FIU’s annual reports, the monitoring of suspicious activities has been highlighted as important each year. The use of crypto funds has been on the increase in hawala activities, illegal gaming, and fraud. The FIU identified an illegal adult site through VDA activity. The results highlighted the two-edged nature of the crypt market.

In order to maintain compliance, the FIU imposed a penalty of INR 2.8 billion on the said entities in the last year. There are stiff penalties for the non-compliant exchanges. These exchanges are required to establish the ownership pattern in order to identify the irregularities.

Offshore Exchanges Face Increased Scrutiny

An FIU report highlights the division of the market for the Indian market into compliant and non-compliant exchanges. Five large offshore platforms, including Binance and Coinbase, managed registration. However, 25 offshore platforms, including BitMEX and LBank, have been banned since October 2025. These cannot operate in the market until registration requirements are met.

This enforcement has resulted in Indian retail volumes being concentrated in regulated premises. Every platform will now be required to appoint a designated director and a principal officer for liaising with the government. The FIU has planned tougher measures for 2026, where there will be risk assessments and screenings for sanctions. It is expected that India will be one of the most regulated jurisdictions in the world for trading digital assets.